Canada is making changes to its anti-money laundering rules, requiring all crypto exchanges to register as a Money Services Business (MSB) with FINTRAC – Canada’s financial intelligence unit. The Government of Canada published updates to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) which requires such entities to report crypto deposits worth $10,000 or more to FINTRAC.
The Government of Canada said in a statement: “These amendments serve to mitigate the money laundering and terrorist activity financing vulnerabilities of virtual currency in a way that is consistent with the existing legal framework, while not unduly hindering innovation. For this reason, the amendments are targeted at persons or entities engaged in the business of dealing in virtual currencies, and not virtual currencies themselves.” Compliance with these regulatory policies have been voluntary, but a small number of exchanges have elected to do so anyway.
Canadian financial institutions have shied away from dealing in cryptocurrency due to the lack of regulatory frameworks and the concern about terrorist financing and money laundering via crypto exchanges. Lori Stein, Partner at Osler, Hosking & Harcourt, said in a statement, “The hope is that now that there is going to be a requirement to register and comply, and oversight by FINTRAC, that banks and other entities are going to be more open to providing services to and dealing with virtual-currency businesses.”
The news comes shortly after major crypto exchange, QuadrigaCX, made headlines in Canada and across the world in late 2018 after the company’s CEO Gerald Cotten died in India. Apparently, Cotten was the only person with access to the wallets’ private keys and owed $190 million worth of crypto that the company is no longer able to access. The company later went into bankruptcy under the guidance of Ernst & Young (EY) as trustee.