What is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act?
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act, also known as PCMLTFA, is a wide-reaching Canadian Act covering money laundering, suspicious financial activity, financing of terrorist activities, and more.
It consists of a wide range of rules and regulations which apply to many different financial forms. The full regulations can be found on the official website, which outlines customers facing anti-money laundering, suspicious transactions, cross-border currency, registration, and penalty regulations.
The act can be summarized by the official Canadian PCMLTFA objective paraphrased below:
- through the implementation of the following measures, money laundering and terrorist financing will be detected and deterred:
- businesses susceptible to money laundering and terrorist financing must establish record keeping and client identification requirements,
- suspicious financial transactions and cross-border movements of currency and monetary instruments must be reported,
- and an agency must be established that is responsible for dealing with reported and additional information
- Respond to organized crime threats by providing law enforcement with the information they need to investigate and prosecute such crimes, all while ensuring safeguards are in place for the protection of personal information
- Aid in fulfilling Canada's commitments to participate in the fight against transnational crime, specifically money laundering and terrorist activities
The act also contains many important rules and regulations for a variety of businesses. For example, it’s vital to know there are many customer identification, record keeping, transaction reporting, and compliance regime requirements. This plays a massive role in many sectors, such as Ontario’s iGaming market.
It’s also important to note that the PCMLTFA is an ever-evolving act, which sees updates and amendments when required, such as to keep up to speed with financial technology developments. The most recent PCMLTFA amendment came into force in May 2020.
Who enforces the PCMLTFA?
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act is enforced by the Canadian government and authorities, with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) being a specialized agency that helps the country uphold and enforce the act.
FINTRAC’s goal is to “facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control.”
Should any organization breach PCMLTFA regulations, they are subject to repercussions set out by FINTRAC. Penalties for breaching the PCMLTFA vary depending on severity of violation, which includes fines ranging from $500,000 to $2 million, as well as up to five years imprisonment. Decisions of violations can be appealed at a Federal Court.
The PCMLTFA and Money Laundering
Money laundering is the illegal process of hiding the origins of money obtained illegally by passing it through a complex system of banking transfers or other transactions. It is a key issue that is tackled by the PCMLTFA and its enforcing agency, FINTRAC.
Specific regulations in regards to money laundering are laid out throughout the act, specifically in its suspicious transactions and cross-border currency regulations.
FINTRAC plays a key role in enforcing PCMLTFA rules and regulations, including anti-money laundering practices as well as aiming to combat and mitigate money laundering where possible.