Since 2014, entities dealing in virtual currencies are subject to Anti-Money Laundering Regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
Scope of the travel rule
All financial entities (FEs), money services businesses (MSBs), foreign MSBs (FMSBs) which include entities "dealing in virtual currency" defined as:
"Virtual currency exchange services include exchanging:
funds for virtual currency,
virtual currency for funds, or
virtual currency for another virtual currency.
Virtual currency transfer services include:
transferring virtual currency at the request of a client, or
receiving a transfer of virtual currency for remittance to a beneficiary."
It also applies to Electronic funds transfer (EFT) or virtual currency (VC) transfers.
Supervisory body
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
Threshold
CAD 1 000
Information to be exchanged:
the name, address and the account number or other reference number (if any) of the person or entity who requested the transfer (originator information); and
the name, address and the account number or other reference number (if any) of the beneficiary.
As of the time of writing, there is no mention of unhosted wallets.
When do you need to comply?
June 1st, 2021. However, FINTRAC will only start the compliance assessment with those regulations from April 1st, 2022.
What else do you need to know?
In Canada, each province and territory has its own rules and securities regulators.
As of June 1st, 2020, entities engaged in virtual currencies are considered MSBs and are required to register with FINTRAC.
Not only do AML Regulations apply to VASPs but also, in most cases, Securities regulations may apply to VASPs who might need to get licensed.
The Canadian Securities Administrators (CSA) is an umbrella organisation of Canada's provincial and territorial securities regulators. It has published guidance in the form of a number of "staff notices" with respect to virtual currencies with a view to addressing the rapidly evolving developments related to virtual currencies. And has confirmed that crypto exchanges do need to be registered with a securities regulator as they deal with "crypto contracts".
Reporting obligations: when receiving virtual currency in an amount equivalent to $10,000 or more in a single transaction, VASPs must submit a large virtual currency transactions report to FINTRAC.
Applicable regulation
Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations
Guidance on Travel rule for electronic funds and virtual currency transfers
