Canada’s Department of Finance has opened consultations on proposed changes to the country’s anti-money laundering (AML) and anti-terrorist financing (ATF) legislation, signaling a significant overhaul in how businesses, including those in the trade sector, will be required to manage risks related to money laundering and sanctions evasion.
The new measures, which could impact around 300,000 companies, are aimed at expanding the scope of businesses subject to Canada’s AML/ATF regime. Stakeholders are encouraged to submit feedback on the proposed changes by December 30, 2024.
A key aspect of the proposed reforms is the integration of economic sanctions into the AML and ATF framework. This integration allows Canadian authorities to more effectively penalize companies involved in sanctions evasion. The changes are designed to strengthen compliance enforcement, particularly in the import and export sectors, where companies will now face additional reporting requirements.
New Reporting Requirements for Importers and Exporters
Under the proposed regulations, importers and exporters will be required to declare that the goods they are trading are not linked to money laundering, terrorist financing, or sanctions evasion. These new obligations extend to any entity involved in importing or exporting goods for commercial, industrial, or similar purposes.
The regulations will require businesses to:
- Declare that their goods are not proceeds of crime or connected to illicit activities.
- Provide attestation that the goods are actually being imported or exported, in order to prevent phantom shipments.
- Maintain records in line with existing customs and tax requirements.
- Respond truthfully to questions from Canada Border Services Agency (CBSA) officers about their imports and exports.
The new regulations are expected to affect approximately 272,000 businesses and will be enforced by CBSA, with penalties for non-compliance. These include fines for improper reporting, record-keeping, or failing to provide accurate information.
Enhanced Information Sharing and Corporate Transparency
The proposed amendments also include provisions for increased information-sharing among private sector entities, such as financial institutions. This would allow businesses to share personal information without the individual’s consent, in cases where the disclosure is necessary for detecting or preventing money laundering, terrorist financing, or sanctions evasion.
Additionally, the new regulations strengthen corporate beneficial ownership transparency. Companies will be required to verify and report discrepancies in their beneficial ownership records, particularly in high-risk transactions. Failure to comply with these reporting obligations could result in monetary penalties.
Implementation Timeline
The Reporting of Goods Regulations, which outline the new reporting requirements for importers and exporters, are set to come into force on a date to be determined. Meanwhile, the requirement for enhanced corporate transparency is expected to be fully implemented by October 1, 2025.
Businesses in the import/export sector and those dealing with goods for commercial purposes are advised to review these changes closely to ensure they are prepared for the new compliance obligations.
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