FINTRAC’s Implementation of Regulatory Amendments

In an effort to further improve the effectiveness of the Anti-Money Laundering and Anti-Terrorist Financing Regime, two sets of regulatory amendments were published in the Canada Gazette on July 10, 2019, and another one more recently on June 10, 2020. Some of the regulatory amendments came into force on June 1, 2020, but the majority of the amendments will come into force on June 1, 2021, the latter of which is the focus of this message to all reporting entities.

FINTRAC wants to acknowledge the valuable contributions and the ongoing collaboration, on the implementation of these amendments by the Canadian Bankers Association and its members, as well as the Guidance and Policy Interpretation Working Group (GPIWG) and the FINTRAC Reporting Working Group (FRWG), which both have representation from all reporting entity sectors. Furthermore and to help reporting entities understand their obligations, FINTRAC regularly provides presentations at conferences and training events attended by reporting entities, industry associations and other regulators

Guidance and Policy Interpretation Working Group (GPIWG)

The Guidance and Policy Interpretation Working Group (GPIWG) is chaired by FINTRAC and reports to the Advisory Committee on Money Laundering and Terrorist Financing (ACMLTF), which is led by Finance Canada. The GPIWG membership generally consists of national industry associations representing most reporting entity sectors. The GPIWG members identify and discuss guidance and interpretation issues related to all sectors, as well as technical issues and questions that may arise. They also provide views on the development of guidance and on regulatory/legislative measures.

Implementation plan for regulatory amendments

The implementation of the above-noted regulatory amendments involves two key streams: 1) changes to FINTRAC’s and reporting entities’ IT systems; and, 2) the drafting of over 60 guidance documents.

1. Delivery schedule of IT systems changes

FINTRAC’s delivery schedule involves a staggered implementation approach for the reporting obligations coming into force on June 1, 2021. Since last summer, FINTRAC has been collaborating with dealers in virtual currency (VC) and other representatives from reporting entity sectors to develop the new large virtual currency transaction report (LVCTR). The LVCTR has been the priority of FINTRAC since all reporting entities will be required to use this new reporting form as of June 1, 2021, to report VC transactions of a value of $10,000 or more to FINTRAC. As shown in the delivery schedule, FINTRAC will continue to work closely with reporting entities in revising the existing forms. FINTRAC will provide batch reporting specifications, as well as reporting guidance, to reporting entities approximately nine (9) months in advance of the roll-out of each revised form, allowing time for systems changes and user testing before each form is finalized and operational.

FINTRAC expects reporting entities to comply with the amendments, but understands that many may face challenges in meeting these new and changing obligations because of pandemic-related stresses on their businesses. Given the scope and magnitude of the changes, and the impact on both FINTRAC and REs, FINTRAC will exercise flexibility when assessing and enforcing the Regulations.

delivery schedule
View the text equivalent for Legs & Regs - Roll-out Plan (as of January 2021)

The diagram is entitled “Delivery schedule”. It is a timeline going from October 2020 to April 2024 divided into three-month periods. The coming into force date of June 1, 2021 is marked with a diamond on the timeline. Below the timeline, there are activities and their respective dates.

As part of the first group of activities, there is an icon that indicates that the distribution of the Large Virtual Cash Transaction Report (LVCTR) package, including technical specifications, validation rules and guidance, will take place in February 2021. This is followed by “REs to Test LVCTR Upload” from March 2021 to May 2021. There is an icon following this activity that indicates that the Reporting of LVCTR starts via the uploading functionality on June 1, 2021.

The second group of activities includes five activities, starting with “FINTRAC to Develop LVCTR Report Specifications” which goes from January 2021 to May 2021. There is an icon following this activity that indicates that the distribution of report specifications (RESTful API, XML, JSON), validation rules and guidance will be done in June 2021. It is followed by “REs to Develop LVCTR” from June 2021 to January 2022, then “ Convert and Certify” from February 2022 to April 2022. There is an icon following this activity that indicates that the reporting starts via RESTful API, FWR and Batch will start on May 2022.

The third group of activities includes six activities, starting with “Collaborate on STR and LCTR Requirements” which goes from June 2021 to December 2021. It is followed by “FINTRAC to Develop Report Specifications” from January 2022 to May 2022. There is an icon following this activity that indicates that the distribution of report specifications (RESTful API, XML, JSON), validation rules and guidance will be done in June 2022. This is followed by “REs to Develop STR and LCTR” from June 2022 to November 2022, and “Certify” from December 2022 to February 2023. There is an icon following this activity that indicates that reporting via RESTful API, FWR and Batch will start in March 2023.

The fourth and final group of activities includes six activities, starting with “Collaborate on EFTR and CDR Requirements” which goes from June 2022 to December 2022. It is followed by “FINTRAC to Develop Report Specifications” from January 2023 to May 2023. There is an icon following this activity that indicates that the distribution of report specifications (RESTful API, XML, JSON), validation rules and guidance will be done in June 2023. This is followed by “REs to Develop EFTR and CDR” from June 2023 to November 2023 and “Certify” from December 2023 to February 2024. There is an icon following this activity that indicates reporting starts via RESTful API, FWR and Batch will start in March 2024.

2. Drafting of guidance documents and consultations

FINTRAC values the diverse views of reporting entities and consults broadly on new or revised guidance documents before publishing them on its website. In support of the implementation of the regulatory amendments, there are approximately 60 guidance documents that need to be developed or updated. Broad consultations are done mainly through the GPIWG, while other sector-specific consultations will be done with particular sectors. With the input of GPIWG members, FINTRAC aims to consult on the draft guidance documents in order of priority and will publish the majority of them in a staggered approach before June 1, 2021. It should be noted that guidance related to existing reporting forms will be published after June 1, 2021 as indicated in the delivery schedule provided above.

FINTRAC will continue to be flexible and use its operational discretion to mitigate current and emerging risks, and will inform all stakeholders of any revisions in its implementation plan, including any changes to the delivery schedule. Please refer to this website and @FINTRAC_Canada on Twitter for future updates.

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