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More Changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act: Mortgage Lenders and Armoured Car Carriers

February 21, 2023

On February 17, 2023, the federal government released draft amending regulations (Amending Regulations) to the regulations (Regulations) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and new draft regulations establishing a cost-recovery framework allowing the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to recover the costs of supervision from the entities they regulate.

The Amending Regulations will have a significant impact on those engaged in mortgage lending and those in the armoured car carrier (ACC) sector, as both of these businesses will now be subject to the PCMLTFA. The proposed amendments also strengthen the correspondent banking provisions of the Regulations to bring them more in line with international standards.

The federal government has provided a 30-day comment period. Affected regulated entities are advised to review the regulatory package and provide commentary if appropriate.

A summary of the amending regulations is set out below.


As has been contemplated for some time, the Amending Regulations bring mortgage lenders into the scope of the PCMLTFA regime. In that regard, it is important to note that the regime applies not only to mortgage lenders but also to mortgage administrators and mortgage brokers.

With respect to mortgage lenders, the Amended Regulations define a mortgage lender as a person (other than a financial entity) that is engaged in providing loans secured by mortgages. Because the definition speaks to mortgages, it is unclear if it would apply to secured interests in land obtained other than by way of a mortgage, such as a debenture. It is also unclear how cross-border lenders with no presence in Canada are treated.

The Amended Regulations apply a comprehensive set of compliance requirements to mortgage lenders, brokers and administrators (mortgage participants) similar to the compliance requirements imposed on other entities under the Regulations. These include the requirement to implement a compliance program, perform a risk assessment of the mortgage participant’s business, develop a training program for employees and agents, and maintain reporting, record-keeping and know-your-client obligations.

Mortgage participants are also required to:

  • Report suspicious transactions

  • Report large cash and large virtual currency transactions and maintain records (C$10,000 plus)

  • Maintain records of receipts for every amount received in respect of a mortgage

  • For mortgage lenders, keep a record of the client’s financial capacity, the terms of the loan, the nature of the client’s principal business or occupation, and for individual clients, provide the name and address of their business or place of work

  • Verify a client’s identity/existence (including obtaining beneficial ownership information)

  • Undertake an effectiveness review of the anti-money laundering (AML) program every two years

  • Conduct ongoing monitoring

In addition, mortgage participants, similar to other regulated entities, are required to determine whether a person they enter into a business relationship with is a politically exposed foreign or domestic person, the head of an international organization, or a family member or close associate of any of the foregoing (collectively, PEPs). They must also keep the required records. In that regard, a mortgage participant is deemed to enter into a business relationship with a client the first time they are required to verify the identity of a client. As such, except for large corporations or public bodies, this obligation will apply to all client relationships. There is also a requirement to make a PEP determination when an amount of C$100,000 or more is received in cash or virtual currency. All of the PEP requirements that apply to other non-account-based sectors will apply to mortgage participants.

Mortgage participants that do not already have existing anti-money laundering programs (or programs that are compliant with the PCMLTFA) will have much to do to work towards implementing their compliance program. The Regulatory Impact Analysis Statement indicates that the provisions of the Regulations applicable to mortgage participants will come into force eight months after publication in the Canada Gazette, which does not provide mortgage participants with much time to prepare for their compliance responsibilities. FINTRAC has indicated it will be doing a lot of industry outreach in the intervening period.

With the addition of mortgage participants, the PCMLTFA regime now covers the major participants real estate industry in Canada, including lenders, mortgage servicers, mortgage administrators, developers, brokers and real estate agents. The addition of mortgage lenders to the PCMLTFA regime is in keeping with the recommendations of British Columbia’s Cullen Commission Report (see our June 2022 Blakes Bulletin: The Cullen Commission Report: What You Need to Know) and with the standards of the Financial Action Task Force (FATF).


As was recommended in the Standing Committee on Finance’s report, Confronting Money Laundering and Terrorist Financing: Moving Canada Forward (Report), published in 2018, the PCMLTFA will finally apply to the ACC sector.

In that regard, those engaged in “transporting currency or money orders, traveller’s cheques or other similar negotiable instruments” (except for cheques payable to a named person or entity) will be treated as a new category of money services business (MSB). They will also be subject to all of the compliance obligations that apply to MSBs (similar to those that apply to mortgage participants, as outlined above), including, significantly for the industry, reporting on large cash transactions and electronic-fund transfers. Registration with FINTRAC as a money services business (or foreign money services business) will also be required.

There are provisions unique to the armoured car sector that have been added to the Regulations. These include:

  • An exemption to reporting and keeping records for large cash transactions and large virtual currency transactions (C$10,000 plus) where the cash or virtual currency is received only for the purpose of transport to or from a regulated entity under the PCMLTFA and at the request of such an entity, and the amount of cash or virtual currency is not provided to the MSB and they cannot readily determine it

  • An exemption from the large cash/large virtual currency requirements where the cash or virtual currency is received only for the purpose of transport between the Bank of Canada and a person in Canada or two places of business of the same entity (where it is the entity that requested the transport)

There are new record-keeping obligations where an ACC MSB transports C$1,000 or more of cash or virtual currency or C$3,000 or more in money orders or similar negotiable instruments. These record-keeping requirements include:

  • The date and location of the collection and delivery

  • The type and amount of cash, virtual currency or negotiable instrument transported

  • The name and address of the person or entity that made the request, the nature of their principal business/occupation and, in the case of an individual, their date of birth

  • The name and address, if known, of each beneficiary

  • The number of every account affected by the transport, the type of account and the name of the account holder

  • Every reference number that is connected to the transport and has a function equivalent to that of an account number

  • The method of remittance

There are also similar records required where the amount being transported has not been declared and the MSB cannot readily determine the amount. These records require a record as to why the amount was not declared, not a record of the amount transported. Less extensive records are also required where an MSB transports cash or virtual currency for a financial institution or a credit union.

There are new requirements regarding verification of identity for MSBs that are ACCs. Identity must be verified (in accordance with the requirements of the Regulations) in circumstances where a person or entity requests an MSB transports C$1,000 or more of cash or virtual currency (in the remote circumstance where a private key is physical) or C$3,000 or more in money orders or similar negotiable instruments. Identity is to be verified at the time the first transport is carried out.

Notably, the armoured car sector has additional PEP determination requirements over and above those that apply to other MSBs. Specifically, a PEP determination is required whenever a person requests that the MSB transport more than C$100,000 in cash or virtual currency. In addition, a PEP determination is required where a person requests that an MSB transport cash or virtual currency in an amount that is not declared or cannot be readily determined. The requirements in this regard apply when the request is received from a “person” who is defined in the PCMLTFA to mean an individual. As such, from a practical perspective, this should not apply to the vast majority of transactions where they are requested by a corporation or other business entity.

MSBs are also required, when they enter into service agreements, to collect basic information on the entity with whom they are contracting, including obtaining information on persons authorized to provide instructions under the agreement and engage in ongoing monitoring of the business relationship. These requirements do not apply where a contract is signed for the transportation of cash or virtual currency with the Bank of Canada, with two financial entities or between two places of business of the same entity (an Exempted Entity). In addition, the record-keeping requirements for the transport of cash and virtual currency noted above and identification verification and PEP requirements do not apply to Exempted Entities.

The Regulatory Impact Analysis Statement provides that the requirements applicable to the armoured car sector will come into force six months after publication in the Canada Gazette.


Some of the changes made to the Regulations impact financial entities. In that regard, the provisions of the Regulations related to correspondent-banking relationships have been strengthened in response to shortcomings identified in FATF’s 2016 evaluation of Canada’s AML/anti-terrorist financing (ATF) regime.

The new requirements impose ongoing monitoring obligations on financial entities in respect of their correspondent-banking relationships. Ongoing monitoring of these relationships is now required to be conducted periodically based on the risk level of the foreign financial institution (FFI). Previously, ongoing monitoring was only required where the FFI had civil or criminal penalties imposed against it for matters relating to anti-money laundering. Similar to the ongoing monitoring obligations in the Regulations applied in other contexts, ongoing monitoring of correspondent-banking relationships is required for the following purposes:

  • Detecting suspicious transactions

  • Keeping FFI information up to date

  • Reassessing the FFI’s risk based on their transactions and activities

  • Determining whether the FFI’s transactions or activities are consistent with the information obtained about the FFI and the risk assessment

In addition to the ongoing monitoring requirements, financial institutions are also required to engage in prescribed due diligence in respect of FFIs. In that regard, financial entities are required to assess the following, based on publicly available information:

  • The reputation of the FFI with respect to its compliance with AML and ATF requirements

  • The quality of the AML/ATF supervision of the jurisdiction of incorporation of the FFI and the jurisdiction where it conducts transactions in the context of the correspondent-banking relationship

Financial entities are also required to take reasonable measures (which means at least making inquiries) to determine the nature of the clientele and markets serviced by the FFI. Additionally, financial entities are now expressly required to include their correspondent-banking relationships in their risk assessments.


In addition to the regulatory amendments described above, the regulatory package includes a new regulation, the Financial Transactions and Reports Analysis Centre of Canada Assessment of Expenses Regulations (Assessment Regulations). This will allow FINTRAC to pass on the expenses it incurs in regulating compliance with the PCMLTFA to reporting entities. Only the following prescribed entities are required to contribute to FINTRAC’s expenses:

  • Banks and authorized foreign banks

  • Life insurance companies

  • Trust and loan corporations

  • Every entity that made more than 500 reports (EFT/large cash/large virtual currency/casino disbursement) during the previous fiscal year period

The Assessment Regulations provide a formula to determine the portion of expenses that each specific regulated entity is required to contribute. The requirement of regulated entities to contribute to regulatory oversight expenses is consistent with the federal regimes supervised by the Office of the Superintendent of Financial Institutions, the Financial Consumer Agency of Canada and the Bank of Canada (under the Retail Payment Activities Act framework).

The Regulatory Impact Analysis Statement indicates that the Assessment Regulations will come into force on April 1, 2024, which will allow FINTRAC to commence recovering its costs from the 2024-2025 fiscal year, going forward.


As a result of the inclusion of ACCs in the regime, there have been a few tweaks to the third-party determination requirements. Currently, where a regulated entity receives C$10,000 or more in cash or virtual currency, they are required to determine if the person from whom they have received the cash/virtual currency is acting on behalf of a third party. If this is the case, the regulated entity is required to take “reasonable measures” to obtain information in respect of the third party. However, where the cash or virtual currency is received by an ACC, the obligation to collect the third-party information will now be mandatory and not subject to a reasonable measures standard.

In addition, when MSBs now register or renew their registrations with FINTRAC, they will be required to provide additional information in respect of their chief executive officer, president and directors, including contact information such as a telephone number and email address. MSBs will also be required to indicate in their registrations the number of agents and branches they have in each country, which may be a daunting task for larger MSBs.

Stronger penalties have been imposed for breach of the Cross-border Currency and Monetary Instruments Reporting Regulations.

Finally, as a result of the addition of the new provisions of the Regulations, corresponding changes have been made to the Administrative Monetary Penalties Regulations to include penalties for breaches of the new provisions of the Regulations. Failure to engage in ongoing monitoring of correspondent banking relationships is considered to be a serious violation of the Regulations.

There is hope that the B.C. government will take notice of the addition of mortgage participants to the PCMLTFA regime and not impose additional regulation on those in the mortgage industry as was proposed in the Cullen Commission Report.

Mortgage participants and those engaged in the ACC sector are advised to begin the process of implementing the compliance regime required under the PCMLTFA to be ready for the in-force date of the Regulations and to submit comments on the Regulations for those provisions that are problematic.

For more information, please contact:

Jacqueline Shinfield                416-863-3290

or any other member of our Financial Services or Financial Services Regulatory group.