Lessors and financiers take note — New Canadian AML regulations in force

The Government of Canada recently expanded the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”) to strengthen efforts against money laundering and terrorist financing by targeting specific sectors, enhancing regulations and ensuring compliance with international standards.

On April 1, 2025, new regulations under the PCMLTFA came into effect, introducing anti-money laundering compliance obligations for factoring, financing, and leasing entities. These obligations include requirements to conduct “know-your-client” activities, report transactions, and keep records. We discuss the new obligations for factoring entities in our earlier article: Expanding Canada's AML/TF framework – New regulatory requirements for factoring companies. This article outlines some of the new obligations for financing and leasing entities under the PCMLTFA.

Financing and leasing entities

A financing or leasing entity is a person or entity engaged in the business of financing or leasing. A person or entity is engaged in the business of financing or leasing when it is financing or leasing:

• property, other than real property or immovables, for business purposes;‎
• ‎passenger vehicles in Canada; or
• ‎property, other than real property or immovables, ‎that is valued at $100,000 or more.‎

Low-value consumer products like rent-to-own furniture and personal electronics are excluded due to their low money laundering risk. However, financing and leasing arrangements related to property for business purposes, all motor vehicles, and property (such as consumer goods) valued above $100,000 are included due to the high money laundering risk in these subsectors. Financial entities, such as banks, offering similar financing and leasing services are also subject to these new obligations.

Financing and leasing entities are now required to fulfill record keeping, client due diligence, and transaction reporting requirements, as well as establish a compliance program — similar to other reporting entities under the PCMLTFA. For example, financing and leasing entities must report any single cash or virtual currency transaction of $10,000 or more to the Financial Transactions and Reports Analysis Centre of Canada and maintain a record of every cash or virtual currency transaction of $10,000 or more — subject to certain exceptions.

In addition, financing and leasing entities are now subject to obligations specific to their industry. These include new requirements to verify the identity of every party with which a financing and leasing entity enters into a financing or leasing arrangement and keeps associated records — subject to certain exceptions. Financing and leasing entities will also need to keep a record of every payment received in service of a financing or leasing agreement from a client.

Conclusion

Financing and leasing entities must review these new compliance requirements to understand their impact on business operations. For assistance in navigating these new requirements, please contact our Financial Services or Compliance teams.