Ministerial directives and transaction restrictions
Under Part 1.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which came into force on June 19, 2014, the Minister of Finance may:
- Issue directives that require reporting entities to apply countermeasures to transactions coming from or going to designated foreign jurisdictions or entities; and
- Recommend the introduction of regulations to restrict reporting entities from entering into a financial transaction coming from or going to designated foreign jurisdictions or entities.
These authorities allow the Minister of Finance to take steps to protect Canada’s financial system from foreign jurisdictions and foreign entities that are considered to present high risks for facilitating money laundering and terrorist financing.
The directive will be issued by the Minister of Finance. However, FINTRAC will inform reporting entities that a directive has been issued. Each directive will be added below and will include an outline of countermeasures that are limited to the same activities for which reporting entities already have obligations. The countermeasures will enhance or add to these obligations.
Directives will specify the date they come into force and will remain in force until officially revoked, suspended or amended.
Directives will be reviewed at least every three years from the day they take effect.
Directives in force:
- July 25, 2020: Islamic Republic of Iran
- December 9, 2017: Democratic People’s Republic of Korea (DPRK)
The authority to recommend new regulations to restrict certain transactions is intended to be used in the most serious of cases. The Minister of Finance must consult the Minister of Foreign Affairs before recommending regulations to the Governor-in-Council. These regulations will be published in the Canada Gazette and will be prepared on a case-by-case basis.
Compliance with ministerial directives and transaction restrictions
FINTRAC will monitor and assess compliance with directives.
To assess compliance, the PCMLTFA gives FINTRAC the authority to examine the records and inquire into the business and affairs of any entity covered under the Act. When FINTRAC carries out compliance activities, such as on-site or desk-based examinations, to review how reporting entities are complying with their obligations as per the PCMLTFA, FINTRAC may now include compliance with directives as an area of review.
FINTRAC can issue administrative monetary penalties to address instances of non-compliance, and may also disclose cases of non-compliance to law enforcement when there is extensive non-compliance or little expectation of immediate or future compliance.
The existing administrative monetary penalties regime will be extended to all directives, and failure to comply with a directive could result in a penalty. Penalties applicable to a breach of a directive would be set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.
Every person or entity that is found not to be in compliance with the measures included in a directive, as well as any reporting requirements included in a directive is guilty of an offence and liable:
- on summary conviction, to a fine of not more than $50,000 or to imprisonment for a term of not more than six months, or to both; or
- on conviction on indictment, to a fine of not more than $500,000 or to imprisonment for a term of not more than five years, or to both.
Both criminal and administrative monetary penalties cannot be pursued against the same instances of non-compliance.
Guidance on ministerial directives
The Department of Finance has published guidance on Part 1.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act on its website.
- Date Modified: