Assistance with AML/CFT Standards

Canadian Treasury issued changes to Virtual Currency Regulations applying to digital actives and foreign exchange monetary operations (MSB). Such firms are demanded to send data about customer operations with cryptocurrencies to Canadian government agencies. Transactions that exceed 10,000 Canadian dollars, which is about 7,500 US dollars, will be transferred. Additionally, such enterprises must apply for registration.

Starting in 2020, according to the AML regulation of MSB companies, they have the following responsibilities:

• passing a thorough KYC check if it is necessary to perform operations for the funds passing or their exchange – as regulation says;
• sending reports to relevant authorities regarding possible fiscal operations of a suspicious nature.

In particular, from June 2021, all indicated duties cover each of operations when virtual currencies assets appear. MSBs must record and send reports in writing regarding operations made in digital currency, total of which exceeds CAD 10 000. Particularly, companies are demanded to inform FINTRAC about venture capital operations of a large volume.

Executives interested in applying for MSB license for virtual currency transactions should be aware of new changes, effective June 1, 2021, such FMSBs would have similar responsibilities as local MSBs providing services listed in Law addressed to individuals placed in Canadian jurisdiction. FINTRAC has statutory body to impose monetary penalties on commercial projects not complying with PCMLTFA and related norms.

Among others, following KYC duties apply to active registered enterprises:

• accurately find out at what stage relations with a customer becomes business-like, and from that point on, carefully record such a cooperation;
• the company must clarify whether clients are politically significant people and additionally conduct risks assessment in respect of these individuals;
• registered firms undertake to hold recordings and collect data for ownership, personal data and legal entity board;
• controlling of KYC data on stable basis.

Reasons for modifications applying for virtual currency operations. What is virtual currency?

Listed modifications join major overhaul of whole regulative pattern applying to AML regulation of MSB companies. It’s necessary in order to develop and implement effective methods for solving new problems arising from the active use of cryptocurrencies in Canada.

First official demands came into force in 2020, when all structures, one way or another connected with digital assets, had to pass FINTRAC registration, that is, receive the status and license of MSB. Since 2021, virtual actives has following designation in General Rules governing prevention of illegal circulation of funds and financing of terroristic operations:

• digital value consumers use in their paying operations. It isn’t a fiat value being able exchanged for monetary assets of digital or tangible type;
• a key created in cryptosystem and having private character. Through this key, customers can access virtual actives described in the previous point.

Money Service Businesses in any way connected with virtual actives must act correctly in order to guarantee compliance with norms gained legal force.