Canadian Mortgage Companies: Regulated under the PCMLTFA

There have been some recent developments in the anti-money laundering (AML) landscape concerning proposed changes by the Department of Finance affecting federal AML regulations in Canada. These amendments notably impact mortgage brokers, administrators, and lenders. So if you're in the mortgage sector, welcome. Here is what you need to know to get started on the essentials of complying with federal AML legislation.

First and foremost, you'll need to establish an AML compliance program with five key elements: appointing a compliance officer, conducting a risk assessment of money laundering and terrorist financing risks, documenting and implementing compliance policies and procedures, providing AML training to staff, and conducting effectiveness testing of your compliance program every two years.

Now, let's delve into your day-to-day requirements. The legislation mandates specific due diligence on clients, including verifying their identities, understanding beneficial ownership of businesses, assessing political connections, and monitoring client relationships for suspicious activities over a five-year period.

Additionally, you'll have record-keeping obligations, maintaining comprehensive records of all funds received, regardless of the amount, including details about the funds, clients, and affected accounts. Keep in mind, given your company will be keeping records, you will need to be cognizant of privacy laws relating to recordkeeping, which is something Platino Consulting can help with.

Lastly, reporting obligations to FINTRAC, Canada's AML regulator, are crucial. These include reporting cash or virtual currency transactions over $10,000, possession of terrorist property, and suspicious transactions.

Regarding the timeline, the Department of Finance was seeking industry feedback, following which the final amendments were drafted and published to be effective on October 11, 2024. FINTRAC has the legislative authority to issue administrative monetary penalties to reporting entities that are found to be non-compliant with the Act and its associated Regulations, therefore it is important to take these regulatory changes seriously.

For further information or assistance with AML compliance in the mortgage sector, reach out to us! We provide end to end services including conducting a risk assessment, creating your AML policies and procedures, providing annual training and conducting the effectiveness testing of your compliance program every two years. Whatever your compliance needs may be, Platino Consulting can help.