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Canada Strengthens Anti Money Laundering Regulations

by Mike Godfrey, Tax-News.com, Washington

29 June 2007

Jim Flaherty, Minister of Finance, has announced the publication of final regulations strengthening Canada's safeguards against organized money laundering and terrorist financing.

“Canada’s New Government will be relentless in its efforts to prevent money laundering and terrorist crimes,” Flaherty stated when announcing the new regulations on Wednesday. He added: “We are taking an international leadership role to combat money laundering and terrorist financing by devoting substantial new funding to bolster our analytic, investigative and prosecution resources.”

The updated regulations bring Canada’s anti-money-laundering and anti-terrorist-financing regime in line with new Financial Action Task Force standards. They also follow recommendations made in the 2004 Auditor General’s Report, and in a 2004 Treasury Board–mandated evaluation of the regime.

The regulations include:

  • Enhanced customer due diligence measures, such as new requirements to identify the beneficial owners of corporations and other entities.
  • Special due diligence measures including identification and monitoring of correspondent banking relationships and politically exposed persons.
  • A requirement to report attempted suspicious transactions.
  • Enhanced information sharing among the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), law enforcement and other domestic and international agencies.
  • The establishment of a registration regime for money service businesses.

The regulatory amendments implement new provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which received Royal Assent in December 2006. They reflect the comments received from financial institutions and intermediaries following the pre-publication of the regulatory amendments on March 10, 2007.

To provide financial institutions and intermediaries with sufficient time to change their systems and train their employees, these regulations will come into effect on two separate dates. Most of the provisions will come into force on June 23, 2008, while the remainder will be effective on June 30, 2007.

A second phase of proposed regulatory amendments will be pre-published shortly for public comment.

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