The federal government has introduced regulatory amendments which extend Canada’s anti-money laundering and anti-terrorist financing (AML/ATF) legislative framework to crowd-funding platforms and certain payment service providers (“Emerging Funding and Payment Services”) that had previously not been covered by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations, in a fulfillment of one of the proposed AML/ATF measures mentioned in Budget 2022. Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations SOR/2022-76, (the “Regulations”) were published in the Canada Gazette on April 27, 2022, but came into force on April 5, 2022. Charities and not-for-profits that receive donations from or otherwise engage with Emerging Funding and Payment Services should be aware that personal identifying information about the sender and recipient, and even intended purposes of the crowdfunded donations (“Personal Identifying Information”), will be recorded and transmitted to FINTRAC if it meets certain monetary thresholds.
The Regulations in the Canada Gazette were accompanied by a Regulatory Impact Analysis Statement (the Statement), which referred to a need for Canada’s AML/ATF regime to adapt and address issues that had been raised in February 2022 when protests occurred in Ottawa and throughout Canada, funded, in part, through crowdfunding platforms. As reported in greater detail in the February 2022 Charity & NFP Law Update, on February 15, 2022 the federal government filed an Emergency Economic Measures Order (the Order) which – for the period of just over a week – temporarily extended Canada’s AML/ATF regime to apply to crowdfunding platforms, as well as payment processors. In its Statement, the federal government highlighted its concerns that “[a]llowing these gaps [in the AML/ATF regime] to continue represents a risk to the integrity and stability of the financial sector and the broader economy, as well as a reputational risk for Canada.” The amendments introduced by the Regulations are therefore intended to “help prevent the financing of illegal activities through these types of financial services.”