Crowdfunding and Payment Providers Added to AML Regime

Summary#

These are final amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations. They bring many crowdfunding platforms and a broader group of payment service providers into Canada’s anti‑money‑laundering rules, adding record‑keeping, identity checks and reporting duties. Published April 27, 2022, the rules take effect on the day they are registered.

What it does#

• Defines a crowdfunding platform (a website or app used to raise funds or virtual currency by donations) and crowdfunding platform services (running those platforms for others).
• Declares crowdfunding platform services a prescribed service for money services businesses (MSBs).
• Requires an MSB — and foreign MSBs offering crowdfunding platform services to people in Canada — to:
  • keep an information record about the person or entity using the service;
  • record the purpose for which funds or virtual currency are being raised;
  • if the fundraiser is different from the account-holder, record the fundraiser’s name and take reasonable steps to get their address, main business or occupation, and date of birth (for individuals).
• Triggers identity verification and other customer‑due‑diligence steps where an information record must be kept, and specifically when someone donates $1,000 or more using a crowdfunding platform run by an MSB.
• Changes the definition of prescribed electronic funds transfers to include SWIFT MT-103 messages (and equivalents) and narrows a prior exemption for some card and prepaid transfers so more payment services fall under the rules.
• Adds a new administrative‑penalty entry (item 46.1) categorizing failure to keep the records required by the new crowdfunding section as a Minor violation.
• States the Regulations come into force on their registration day.

Who's affected#

• Crowdfunding platforms that accept donations or virtual currency, including foreign platforms that direct services at Canadians.
• A wider group of payment service providers, including those that provide merchant processing, settlements to merchants, or payment processing for bills, payroll, rent/mortgage, tuition, etc. Some of these were not previously covered.
• Existing money services businesses and foreign MSBs that already fall under the law will have explicit new duties when they operate or host crowdfunding services.
• The government estimates about 1,000 reporting entities will be affected.
• The regulatory statement estimates total industry costs over 10 years of $18 million to $20.2 million (PV), made of $13.5 million (PV) in compliance costs plus $4.5 million to $6.7 million (PV) in administrative costs. That works out to roughly $18,000 to $20,240 per affected business over a decade on average (estimates vary by size).

Why it matters#

• The changes close a gap that previously let some crowdfunding and payment services operate without federal anti‑money‑laundering obligations. That gap was highlighted after the early‑2022 blockades, where crowdfunding helped finance illegal activity.
• Bringing these platforms into the reporting system gives FINTRAC better transaction data to share with law enforcement. That can help detect and stop money flows tied to crime or terrorist financing.
• The amendments also help Canada meet international expectations from the Financial Action Task Force (FATF) and reduce reputational and financial risks to the Canadian financial system.
• For affected businesses, the rules mean new administrative work: registration, record keeping, identity checks, system changes, training, and possible reporting to authorities — with a measurable cost over time.