New year, new obligations: Navigating new AML regulations in 2025

On January 1, 2025, the federal government published new regulations (the “Regulations”) that modify obligations for businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”). These changes are designed to enhance Canada’s anti-money laundering and counter-terrorist financing efforts.

The Regulations have three key effects: they impose new obligations on specific entities, require enhanced reporting on compliance with Canada’s sanctions regime, and strengthen the registration framework for money services businesses (“MSBs”).

This article discusses the implications of the Regulations on Canada’s anti-money laundering framework and the federal government’s rationale for these new regulations.

New compliance obligations: ATMs and title insurers

Starting on October 1, 2025, the Regulations will create new obligations for acquirers of private automated banking machines (also known as White-label ATMs, hereinafter referred to as “WLATMS”) and title insurers.

ATMs

WLATMs are privately owned and operated automated cash machines, typically found in retail locations. These machines connect to payment networks through intermediary companies known as “acquirers.”

According to Canada’s 2023 Updated Assessment of Inherent Risks of Money Laundering and Terrorist Financing, WLATMs are particularly vulnerable to money laundering activities. They may be directly owned and operated by criminal or by legitimate businesses that could be under criminal control. A 2008 RCMP Strategic Intelligence Assessment revealed that organized crime groups had infiltrated the WLATM industry, estimating that as much as $315 million annually could be laundered through WLATMs, and potentially up to $1 billion per year.

The Regulations will make acquirers offering cash withdrawal services for WLATMs reporting entities under the PCMLTFA and subject to registration with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”).

Title insurers

Title insurers offer specialized insurance policies that protect residential or commercial property owners and their lenders against financial losses related to the property's title or ownership. According to the federal government, fraud, a known precursor to money laundering, is increasing in the real estate sector, with rising incidents of criminals using title fraud to unlawfully seize homeownership and profit from its value.

Currently, real estate representatives are only required to take “reasonable measures” to identify unrepresented parties. The Regulations will make title insurers reporting entities under the PCMLTFA. As reporting entities, title insurers will be required to develop a compliance program, meet identity verification and record keeping requirements, and submit reports to FINTRAC, among other requirements.

Enhanced reporting: Sanctions compliance

According to the federal government, recent world events have created a need to have more robust systems in place to both utilize sanctions and address sanctions evasion, including through clear and effective reporting on sanctioned property in Canada.

The Regulations will create a new sanctioned property report, which reporting entities will need to report to FINTRAC. Currently, reporting entities under the PCMLTFA are required to submit a terrorist property report to FINTRAC when they are required to make a disclosure under the Criminal Code or the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism. In addition to these foregoing acts, the Regulations will require reporting entities to also report to FINTRAC on the sanctioned property of entities listed under the Special Economic Measures Act (the “SEMA”), the Justice for Victims of Corrupt Foreign Officials Act (the “JVCFOA”), and the United Nations Act (the “UNA”).

The Regulations relating to sanctioned property reporting are set to come into force on March 1, 2025, for sanctions under the UNA, and on October 1, 2025, for sanctions under the SEMA and the JVCFOA. The longer implementation time for sanctions under the SEMA and the JVCFOA relate to the much larger number of sanctions that exist under those acts.

MSB registration

The Regulations also introduce a strengthened registration framework for MSBs. The Regulations will require domestic MSBs to submit criminal record checks of their chief executive officer, president, directors, and every person who controls directly or indirectly 20 percent or more of the MSB or shares of the MSB to FINTRAC during registration (and re-registration) every two years. Currently, only foreign MSBs are required to submit the foregoing criminal record checks.

In addition, the Regulations will require agents of MSBs that are entities, to submit criminal record checks of their chief executive officer, the president, the directors and any person who owns or controls, directly or indirectly, 20 percent or more of the entity or the shares of the entity to FINTRAC during registration (and re-registration) every two years.

The Regulations pertaining to the strengthened registration framework for MSBs are scheduled to come into force on October 1, 2025.

Conclusion

In addition to the foregoing, the Regulations will implement other changes to the registration framework for MSBs. For assistance in navigating the changes to the MSB registration framework, or any other changes discussed in this article, please contact our Financial Services or Compliance teams.