Canada -- AML/CFT Compliance Regulatory Overview

Cryptocurrency and virtual asset service providers (VASPs) in Canada, such as exchanges and wallet providers, must register as Money Services Businesses (MSBs) with FINTRAC and comply with AML/CTF requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). FINTRAC oversees AML/CTF compliance, while the Canadian Securities Administrators (CSA) handles securities-related aspects for crypto assets often classified as securities.[1][2][4]

AML/CFT Legislation

The PCMLTFA is the primary federal legislation establishing Canada's AML/CTF framework, incorporating virtual currency dealers since 2014 (via Bill C-31) with full requirements effective June 2020 and expansions in June 2021.[1][3][6][7] It mandates MSBs, including VASPs dealing in virtual currencies, to implement compliance programs addressing money laundering and terrorist financing risks.[2][3][5]

Customer Due Diligence (CDD) Requirements

VASPs must establish a risk-based AML/CTF compliance program including customer identification (KYC), ongoing risk assessments, appointment of a compliance officer, employee training, and independent reviews.[1][3][4] This covers verifying client identities, understanding transaction purposes, and applying enhanced due diligence for high-risk scenarios, aligned with "Travel Rule" obligations for transfers over CAD 1,000 (transmitting sender/receiver information).[2]

Suspicious Transaction Reporting

VASPs must report suspicious transactions—any activity indicating potential money laundering or terrorist financing—to FINTRAC promptly.[1][2][3] Additional reports include large cash transactions (CAD 10,000+ in a single transaction or within 24 hours), large electronic funds transfers (CAD 10,000+), and international transfers.[3]

Record-Keeping Obligations

Records of all transactions, client identification, and compliance activities must be maintained for at least five years, supporting audits and investigations by FINTRAC.[1][2]

Oversight Authority

FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) administers PCMLTFA compliance for VASPs, conducting examinations and enforcement.[1][2][3][4][6]

• FINTRAC website: www.fintrac-canafe.gc.ca

The CSA coordinates securities regulation for crypto trading platforms, requiring registration as dealers or marketplaces in provinces (e.g., via Ontario Securities Commission at www.osc.ca or Autorité des marchés financiers at www.lautorite.qc.ca).[1][2][4] CSA guidance: www.securities-administrators.ca. Non-compliance risks penalties, deregistration, or criminal charges.[1]