Proposed changes to anti-money laundering legislation may prove onerous for smaller reporting entities: Fasken Martineau

Proposed changes to Canada’s anti-money laundering and anti-terrorist financing legislation may prove to be very onerous for smaller reporting entities, according to a Nov. 17 Financial Institutions Bulletin issued by law firm Fasken Martineau.
The Department of Finance (Canada) released its Consultation Paper on Proposed Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations on Ascertaining Identity on Nov. 7.
The consultation paper outlines significant proposed amendments to the “customer due diligence” (CDD) requirements contained in the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.
“The proposed amendments will, if adopted, significantly raise the bar with respect to the CDD requirements applicable to [reporting entities],” Fasken Martineau writes. “Many reporting entities, particularly those that do not have large sophisticated compliance groups, are likely to find the proposed amendments quite onerous.”
In particular, the bulletin zeros in on the proposal to introduce the new concept of CDD requirements for “business relationships.”
“Currently, CDD requirements only apply where an account is opened or certain financial transactions are conducted,” Fasken Martineau writes. “The consultation paper proposes amending the regulations to extend the application of certain obligations to business relationships, which would be defined as ‘any financial relationship established to provide financial activities or transactions.’