New AML Rules for Armoured Cars, Mortgages

Summary#

These are final federal rules that change several anti-money-laundering regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. They add new reporting and record-keeping duties for some businesses (notably armoured car companies and mortgage lenders), introduce a way for FINTRAC to recover compliance costs from regulated entities, raise some cross‑border cash penalties, and make other technical fixes. The rules were published in the Canada Gazette on October 11, 2023 and different parts take effect at different times.

What it does#

• Sets up cost recovery for FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada):
  • Prescribes a formula so FINTRAC can charge reporting entities for the costs of its compliance program. (The related assessment rules are expected to operate starting April 1, 2024.)
• Brings new sectors and activities under AML/ATF obligations:
  • Armoured car companies that collect cash, virtual currency or negotiable instruments for transport must have a compliance program, verify clients, keep records and report suspicious or large transactions.
  • Mortgage lending entities (brokers, lenders, administrators, including some private lenders) must also put in place compliance programs, identity checks, record keeping and transaction reporting.
• Tightens rules for correspondent banking:
  • Canadian financial institutions must do reputation checks, risk assessments and ongoing monitoring of foreign correspondent banks and keep records of those assessments.
• Changes cross‑border cash penalties:
  • Penalties for failing to declare cash or monetary instruments at the border are changed to percentages of the undeclared amount: 5% (up to $2,500) in some first‑time cases, 25% in others, and 50% for serious concealment or repeat seizure.
• Adds record rules for transport of cash and virtual currency:
  • Transporters must keep specified records when, at a client’s request, they carry $1,000 or more in cash or virtual currency or $3,000 or more in negotiable instruments — with some exemptions (e.g., transfers involving the Bank of Canada, between financial entities, or between two branches of the same entity).
• Streamlines administrative procedures:
  • Allows FINTRAC to serve administrative monetary penalty documents electronically without also mailing a paper copy.
• Updates the registration rules for money services businesses (MSBs):
  • MSBs must provide contact email and telephone numbers for key officers and list how many agents/branches they have in each country.
• Makes many technical and wording fixes across suspicious-transaction reporting, registration and other schedules and forms.

Who's affected#

• Armoured car companies that move cash, virtual currency, money orders, traveller’s cheques or similar negotiable instruments in Canada.
• Mortgage-sector businesses not already covered by federal rules, including brokers, private lenders, lenders that underwrite loans, and administrators.
• Federally regulated financial institutions (banks, trust and loan companies, life insurers) — for the FINTRAC cost‑recovery formula and correspondent-banking rules.
• Money services businesses (MSBs) — for expanded registration information.
• Casinos and other reporting entities in limited ways (record or receipt requirements tied to amounts of $3,000 or more).
• Cross‑border travellers who carry $10,000 or more in cash or monetary instruments (the reporting threshold stays the same, but penalties are increased).
• FINTRAC and the Canada Border Services Agency (CBSA), which will enforce and administer parts of the changes.

If it’s unclear whether your business is covered, the rules define categories in detail — but the practical effect is that previously unregulated transporters of cash and some mortgage businesses will now have legal AML/ATF duties.

Why it matters#

• These changes aim to make it harder to use Canada’s financial and real estate systems to hide criminal or terrorist money. That includes money carried across borders, cash moved inside Canada, and funds flowing through mortgage lending or armoured-car services.
• The government estimates the package will impose about $20,829,796 in costs (present value) on businesses over 10 years. Small businesses are expected to bear a share of those costs, especially small mortgage lenders and some small transporters.
• The penalty changes make border penalties proportionate to the amount undeclared (using 5%, 25%, 50% scales), which officials say should be more dissuasive than the old fixed amounts.
• The new cost‑recovery model means regulated financial firms will help fund FINTRAC’s supervision work. That changes who pays for federal AML oversight and may affect budgets and billing for large institutions starting in 2024.
• The measures are intended to bring Canada closer to international standards (the FATF); that can affect Canada’s global financial reputation and how Canadian firms deal with foreign partners.
• Some parts take effect immediately on registration of the rules, while other parts come into force later (notably a 12‑month delay for many obligations so businesses have time to prepare — for example the first anniversary of publication, October 11, 2024, applies to numerous sections).