FINTRAC Issues Guidance on Reporting Financial Transactions Related to Sanctions Evasion
Effective August 19, 2024, businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) must report transactions suspected to be related to sanctions evasion to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). FINTRAC recently issued guidance on when and how to report such transactions.
Background
Canada’s 2023 Fall Economic Statement announced the government’s intention to introduce legislative measures aimed at combatting sanctions evasion. Canadian sanctions place restrictions on the activities permissible between persons in Canada or Canadians outside Canada and foreign states, individuals, or entities. Canadian sanctions are imposed under the United Nations Act, the Special Economic Measures Act, or the Justice for Victims of Corrupt Foreign Officials Act.
Effective August 19, 2024, reporting entities under the PCMLTFA will have expanded obligations to report to FINTRAC financial transactions related to suspected sanctions evasions where there are reasonable grounds to suspect sanctions evasion by someone acting on behalf of a sanctioned person.
FINTRAC Guidance
FINTRAC recently published the following guidance to support reporting entities in meeting their sanctions-related reporting obligations: Report suspected sanctions evasion.
FINTRAC also developed a Special Bulletin on financial activity associated with suspected sanctions evasion to support reporting entities in identifying and assessing sanctions evasion risks, applying controls and measures to mitigate these risks, and effectively detecting and reporting suspicious transactions to FINTRAC by submitting a Suspicious Transaction Report.
In the Special Bulletin, FINTRAC sets out common techniques and channels used by individuals and entities to circumvent sanctions. Among these are the use of intermediary jurisdictions to set up complex networks of shell and front companies (often registered to addresses in offshore financial centres or tax havens), and the use of non-resident bank accounts (generally located in “secrecy jurisdictions” or those known to cater to customers in sanctions jurisdictions). FINTRAC also notes that alternative financial channels, including the use of crytpocurrencies and other emerging financial technologies, have played a role in sanctions circumvention activities. The Special Bulletin expands on the particular use of these techniques.
Looking Forward
Notably, reporting entities have additional obligations under Canada’s sanctions laws regarding business activity connected with sanctioned individuals and entities. Goodmans is keeping apprised of developments in this area and will continue to provide updates.
For further information concerning reporting entity obligations to report suspicious transactions to FINTRAC, or concerning sanctions-related obligations more generally, 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.
Expertise
Authors
Insights
-
Financial Services Regulatory
FINTRAC Issues Guidance on Reporting Financial Transactions Related to Sanctions Evasion
Effective August 19, 2024, businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) must report transactions suspected to be related to sanctions evasion to… -
Financial Services Regulatory
OSFI Releases Annual Risk Outlook – Fiscal Year 2024-2025
On May 22, 2024, the Office of the Superintendent of Financial Institutions (OSFI) released its Annual Risk Outlook – Fiscal Year 2024 - 2025 (the “ARO”), which summarizes the current risk environment… -
Financial Services Regulatory
FINTRAC Advisory Concerning Financial Transactions Related to High-Risk Countries Identified by FATF
On April 29, 2024, the Financial Transactions and Reports Analysis Centre (FINTRAC) issued an updated advisory (the “Advisory”) concerning financial transactions related to countries… -
Financial Services Regulatory
Canadian Securities Administrators Extend Compliance Deadline in Interim Approach to Value-Referenced Crypto Assets
On April 17, 2024, the Canadian Securities Administrators (CSA) provided an update to their interim approach in respect of “Value-Referenced Crypto Assets” (VRCAs), as set out in the CSA’s guidance in… -
Financial Services Regulatory
Obligations and Opportunity - Budget 2024’s Impact on the Blockchain Industry
As crypto-assets become subject to further regulation both domestically and globally, industry players find themselves presented not only with new obligations but also with new opportunities. Canada’s… -
Financial Services Regulatory
Budget 2024 Announces Additional Measures to Combat Financial Crime
In Budget 2024, the Government of Canada announced its intentions to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the Criminal Code, the Income Tax Act, and…
Featured Work
-
Mergers and Acquisitions
Amp Energy’s Innovative $350 Million Cross-Jurisdictional Credit Facility
Goodmans LLP acted for Amp Solar Group in connection with Amp Energy’s innovative $350 million cross-jurisdictional credit facility with a consortium of leading institutional investors including…
News & Events
-
- 06:30 PM Financial Services Regulatory
Francesca Guolo at Joint Staff Notice 23-329 on Short Selling in Canada
On the 8th of December 2022, The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) published a Joint Staff Notice 23-329 on Short Selling…