AML Rules for Factors and Lessors

Summary#

These are final amendments called Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations: SOR/2025-68. They add new rules for factoring businesses and financing/leasing businesses, tighten reporting and record‑keeping for some high‑value cash and virtual‑currency transactions, and create a new code‑of‑practice process for handling personal information. Most changes come into force on April 1, 2025 (with a few parts starting later).

What it does#

• Defines two new business types in the rules: a factor (a factoring business) and a financing or leasing entity.
• Requires both factors and financing/leasing entities to report to the Centre when they receive $10,000 or more in cash or in virtual currency in a single transaction, unless the money comes from a financial entity or public body.
• Requires factors to keep extra records for each factoring agreement, including information about payments and a receipt record for any amount of $3,000 or more (again, with an exception for money from financial entities or public bodies).
• Requires financing or leasing entities to keep records about every financing or leasing arrangement that meets certain conditions (business equipment, passenger vehicles in Canada, or property valued at $100,000 or more).
• Treats crowdfunding platform services and cheque‑cashing services as prescribed services under the Act (so they are covered by rules that apply to such services).
• Adds a specific record requirement for cheque cashers who cash one or more cheques totalling $3,000 or more. That record must include names, account numbers, issuer names and, if virtual currency is involved, transaction identifiers.
• Adds identity‑verification timing rules and limited exemptions (for public bodies and large, publicly traded companies with at least $75 million in net assets and in FATF member countries).
• Expands rules about checking whether customers are politically exposed people. A list of professions and businesses (including factors, financing or leasing entities, accountants, real‑estate professionals, mortgage people, dealers in precious metals/stones, certain notaries, and government departments/agents) must:
  • check at the start of a business relationship,
  • check periodically, and
  • take extra steps when receiving $100,000 or more in cash or virtual currency.
• Adds a new Part 8 that requires regulated businesses to have a code of practice about how they disclose, collect and use personal information. The code must be approved by the Privacy Commissioner (or it is deemed approved after 120 days if no decision is given). The code must be renewed or re‑approved every 5 years.
• Creates a new reporting duty when a business finds a “material discrepancy” between customer information it has and public corporate records under the Canada Business Corporations Act. The business must report that discrepancy to the Director named in that Act within 30 days, unless it is resolved in that time. The rules list some types of minor mismatches that are not “material.”
• Classifies many of the new obligations as “minor” violations for administrative monetary penalty purposes.
• Coming into force:
  • General: April 1, 2025 (or the registration day if registered after that).
  • Sections 12–15, 20 and 23: October 1, 2025.
  • Section 17: when section 344 of the Budget Implementation Act, 2024, No. 1 comes into force (or on registration if the regulations are registered after that).

Who's affected#

• Businesses that provide factoring services — factors.
• Businesses that finance or lease goods (not land), including those that finance passenger vehicles in Canada and leases for items valued at $100,000 or more — financing or leasing entities.
• Cheque‑cashing services and crowdfunding platform services.
• Many other regulated service providers already named in the Act, such as:
  • accountants and accounting firms;
  • real estate brokers, sales representatives and developers;
  • mortgage administrators, brokers and lenders;
  • dealers in precious metals and precious stones;
  • British Columbia notaries and British Columbia notary corporations;
  • departments or agents of the Crown in right of Canada or a province.
• Businesses that use public corporate filings under the Canada Business Corporations Act as part of their customer checks (because they may now have to report discrepancies).
• The Privacy Commissioner (who must approve codes of practice) and the Centre (which receives the new reports).

If it is unclear whether a specific business falls under the new definitions (for example, some leasing or financing arrangements), that uncertainty remains in the regulations and may require legal or regulatory advice.

Why it matters#

• These changes expand who must follow anti‑money‑laundering rules. New groups of businesses now need to collect identity information, keep transaction records, and report large cash or virtual‑currency transactions. That raises compliance work and costs for those businesses.
• The rules aim to make it harder to hide large cash or crypto transactions through factoring, leasing, cheque cashing or vehicle financing. That could make suspicious activity easier to detect.
• The new data‑protection code and the reporting of discrepancies link customer identity checks to public corporate records. This increases oversight of beneficial‑ownership information and tries to correct inaccurate corporate records.
• For ordinary customers, the practical effect is more checks and record collection when you enter into factoring, finance or leasing deals, cash larger cheques, or pay large sums in cash or crypto — especially above the $3,000, $10,000 and $100,000 thresholds named in the rules.