FINTRAC updates guidance on reporting terrorist and sanctioned property
On February 28, 2025, the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) published updated guidance (the “Guidance”) that clarifies the reporting requirements related to terrorist and sanctioned property under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”) and its associated regulations. The Guidance reflects recent amendments to the PCMLTFA and its associated regulations (the “Amendments”). The changes introduced by the Amendments and the Guidance will impact all reporting entity sectors and aim to enhance compliance with Canadian laws related to assets owned or controlled by terrorist groups, sanctioned entities, and designated individuals.
The Amendments and Guidance expand the scope of reporting obligations, now including a broader range of sanctioned persons and entities. While reporting entities are still required to report possession of terrorist and sanctioned property, reports must now be filed through the “Listed Person” or “Entity Property Report”. Previously, reports were triggered when a reporting entity was required to make a disclosure under subsection 83.01(1) of the Criminal Code or the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism. However, additional reporting obligations will now include when a reporting entity is required to make a disclosure under orders or regulations made under the United Nations Act, the Special Economic Measures Act (“SEMA”), and subsection 7(2) of the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (the “Sergei Magnitsky Law”).
It is also important to note that the definition of “property” now includes physical goods, such as equipment, vehicles, or artwork, that may be owned or controlled by terrorist groups, listed persons, or listed entities. Additionally, SEMA and the Sergei Magnitsky Law include deemed ownership rules. These rules deem certain property to be owned by listed persons. The deemed ownership rules under SEMA and the Sergei Magnitsky Law are quite broad and go beyond a simple majority control test.
Despite these changes, reporting entities must continue to submit a Suspicious Transaction Report to FINTRAC if there are reasonable grounds to suspect that a transaction relates to sanctioned activities, such as money laundering, terrorist financing, or sanctions evasion. In addition, entities must ensure that their compliance policies and procedures are up-to-date and that they continue to maintain a record of any Listed Person or Entity Property Report submitted to FINTRAC for at least five years from the date the report is filed.
The Guidance is effective starting March 2, 2025, for property owned or controlled by individuals or entities subject to orders or regulations under the United Nations Act. On October 1, 2025, the reporting obligations will be expanded to apply to property owned or controlled by individuals and entities under orders or regulations made under SEMA and the Sergei Magnitsky Law.
