Tighter AML Rules for Casinos and Real Estate

Summary#

These are proposed amendments, led by the Department of Finance, to tighten Canada’s anti-money‑laundering and counter‑terrorist‑financing rules under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. If adopted, the changes would expand identity checks and record‑keeping for several non‑bank sectors (especially casinos and real‑estate) and for virtual currency transfers, and they would impose new compliance costs (an estimated $18,069,097 present value over 10 years). This is a proposal published on February 15, 2020 and not yet law; comments were invited for 30 days after publication.

What it does#

• Expands customer checks and beneficial‑ownership rules to more non‑financial gatekeepers, including:
  • accountants and accounting firms;
  • British Columbia notaries;
  • real estate brokers, sales representatives and developers;
  • dealers in precious metals and stones;
  • certain departments, agents or mandataries of the Crown.
• Requires those same sectors to take reasonable steps to identify politically exposed persons (PEPs) and heads of international organizations (HIOs), and to verify beneficial owners when dealing with companies, trusts or other entities.
• Changes how a “business relationship” is defined for real‑estate professionals so that a single transaction that triggers ID checks can create an ongoing relationship (previously two transactions were needed).
• Raises the identity‑verification threshold for casinos to $3,000 in a single transaction (so casinos must verify identity at that level).
• Extends the “travel rule” to virtual‑currency transfers: businesses dealing in virtual currency must include originator and beneficiary information with transfers and keep records to match FATF guidance.
• Clarifies and expands the information required on cross‑border currency declaration forms (for movements of $10,000 or more), for example requiring amounts in both Canadian and original foreign currency, travel dates, and names/addresses of origin, destination, couriers and intermediaries.
• Adds ongoing monitoring duties and other technical/organizational updates (schedules, administrative‑penalty rules, record formats).
• Timing proposed in the statement:
  • Certain cross‑border and virtual‑currency registration steps already phased in: June 1, 2020; most other new obligations would come into force on June 1, 2021 (12 months transition).

Who's affected#

• Private businesses and professionals who act as financial gatekeepers, most notably:
  • accountants and accounting firms;
  • real estate brokers, sales representatives and developers;
  • casinos;
  • dealers in precious metals and stones;
  • money services businesses (MSBs), including foreign MSBs dealing with Canadian clients;
  • certain federal/provincial Crown agents (examples in the text include services like money orders).
• Financial intelligence and enforcement bodies, especially FINTRAC, which will supervise and enforce the new rules.
• Travellers and couriers who move $10,000 or more in currency or monetary instruments across the border (they must complete more detailed declaration fields).
• Scale: the analysis estimates about 18,006 reporting entities would be affected; over 99.7% of them are small businesses.

Why it matters#

• These changes aim to close gaps highlighted by parliamentary and independent reviews (including reports about money‑laundering risks in British Columbia’s casinos and real‑estate markets) and to align Canada with international standards set by the Financial Action Task Force (FATF).
• Expected public effects:
  • More information available to law enforcement from financial intelligence, which may help investigations of money laundering and related crimes.
  • Reduced anonymity for people hiding ownership of companies, trusts or large transactions.
  • Increased compliance work and costs for many small firms (estimated total cost $18,069,097 PV over 10 years; annualized $2,572,632; average PV cost per small business about $994).
• The government says benefits such as improved national security, reduced crime and better international reputation are important but hard to quantify. Not taking action could risk international scrutiny or reputational harm to Canada’s financial sector.