Anti-Money Laundering Obligations for Factors, Cheque Cashers, and Financing/Leasing Entities; Declaration and Record Keeping Requirements for Traders

Recent amendments to regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”) introduce anti-money laundering compliance obligations for factors, cheque cashers, and financing or leasing entities as of April 1, 2025. Also as of April 1, new regulations under the PCMLTFA require traders to make certain declarations regarding imported or exported goods and to retain certain records.

The amended regulations also facilitate information sharing between reporting entities (in force as of March 4, 2025) and introduce measures to strengthen beneficial ownership transparency (in force as of October 1, 2025).

Compliance Obligations for Factors, Cheque Cashers, and Financing/Leasing Entities

As of April 1, 2025, factors, cheque cashers, and financing or leasing entities are considered reporting entities under the PCMLTFA and subject to ongoing AML compliance obligations. Those obligations include the implementation of an AML compliance program with risk assessment, know-your-client, reporting and record keeping requirements.

FINTRAC published guidance for factors, cheque cashers, and financing or leasing entities detailing these requirements. FINTRAC also indicated that for one year it will emphasize outreach and guidance, and will consult with industry regarding the new regulatory obligations, to foster greater awareness and position these new reporting entities to implement and develop their compliance programs.

Declarations and Record Keeping Requirements for Traders

As of April 1, 2025, a new regulation under the PCMLTFA requires traders (both persons and entities) to declare whether their imported or exported goods are proceeds of crime or relate to money laundering, terrorist financing, or sanctions evasion, and to attest that the goods are in fact being imported or exported. These changes are intended to combat phantom shipments. Contraventions of the new requirements will attract monetary penalties.

Traders are also required to retain records consistent with the records they already have to maintain for customs and tax purposes and to truthfully answer questions related to the import or export of goods when asked by a Canada Borders Services Agency (CBSA) border services officer.

The new regulation also includes seizure and forfeiture rules and gives the CBSA the power to seize and forfeit goods when they have reasonable grounds to believe the goods are proceeds of crime or related to money laundering, terrorist financing, or sanctions evasion.

Information Sharing Between Reporting Entities

In force since March 4, 2025, the amendments allow reporting entities to share information with each other to more effectively detect and deter money laundering, terrorist financing and sanctions evasion, while maintaining privacy protections for personal information.

Reporting entities can engage in information sharing by submitting Codes of Practice that relate to the sharing of personal information amongst themselves and submit the proposed codes to the Office of the Privacy Commissioner of Canada for approval. The Codes would apply to the sharing of personal information without the individual’s consent.

The Codes of Practice must contain these elements:

• parties participating in the codes,

• intended use of the information to be disclosed,

• personal information to be disclosed,

• how the information may be disclosed,

• how records of the information may be kept, and

• an explanation of how the information complies with the requirements of the PCMLTFA, and how the Codes of Practice provide for substantially the same or greater protection of personal information as is provided under the Personal Protection and Electronic Documents Act (PIPEDA).

Beneficial Ownership Transparency

Beginning October 1, 2025, new obligations will come into force to strengthen corporate beneficial ownership transparency by implementing a requirement for reporting entities to report or resolve material discrepancies between their records and a company’s registry filings to the federal beneficial ownership registry administered by Corporations Canada, in circumstances where they assess there is a high risk of a money laundering or terrorist financing offence. Penalties for non-compliance with this new obligation will also be introduced.

Looking Forward

Goodmans Financial Services Regulatory Group will continue to follow the implementation of these measures.

For further information concerning these measures, and what they might mean from a compliance perspective, please contact any member of our Financial Services Regulatory Group.

The author would like to thank  Cathy Costa-Faria, Associate, for her assistance in writing this Update.