Since 2014, entities dealing in virtual currencies have been 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" which are defined by the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations 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.
At the time of writing, there was no mention of unhosted wallets.
When do you need to comply?
1 June 2021. However, FINTRAC will only start the compliance assessment with those regulations from 1 April 2022.
What else do you need to know?
In Canada, each province and territory has its own rules and securities regulators.
As of 1 June 2020, entities engaged in virtual currencies are considered MSBs and must register with FINTRAC.
Not only do anti-money laundering (AML) Regulations apply to virtual asset service providers (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 several "staff notices" concerning virtual currencies to address the rapidly evolving developments related to virtual currencies. It has been 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
