International electronic funds transfers
Virtual currencies
Domestic PEPs and heads of international organisations
Unregistered foreign money services businesses
Derivatives and benchmarks


On June 19 the Economic Action Plan 2014 Act, No 1, which implements certain provisions of the 2014 Federal Budget, was passed by the Canadian government. This legislation is also known as Bill C-31. Certain changes will be of interest to financial institutions and money services businesses (MSBs).

International electronic funds transfers

A new definition of 'reporting entities' in the Income Tax Act (Canada) includes federally and provincially regulated financial institutions, credit unions and MSBs. Reporting entities will be required to file with the Canada Revenue Agency an information return (the form of which will be prescribed by regulation) in respect of every electronic funds transfer of C$10,000 or more that is sent outside Canada or received from outside Canada at the request of a client of the reporting entity. This new reporting requirement does not apply in respect of electronic funds transfers within Canada.

These amendments came into force as of June 19, but apply to electronic funds transfers made after 2014 (ie, beginning January 1 2015).

Virtual currencies

The definition of 'money services business' (MBS) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) will be expanded to include entities that deal in virtual currencies. Virtual currencies will be defined in regulations that have not yet been published and are expected to include Bitcoin. As a result, it appears that Bitcoin exchanges will be regulated as MBS.

The date on which this amendment will come into force has not been announced.

Foreign MSBs that provide services to customers in Canada will be required to register with the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC).

Entities that do not have a place of business in Canada, but are engaged in the business of providing one or more of various services directed at Canadians and provide those services to customers in Canada, will likewise be required to register with FinTRAC. The activities that require registration are the same as those that currently require MSBs to register, including foreign exchange dealing, remitting or transmitting funds and issuing or redeeming money orders or other instruments, with the addition of dealing in virtual currencies, as noted above.

The date on which this requirement will enter into force has not been announced. Once this provision comes into force, registration will be required immediately for foreign MSBs. It remains to be seen whether the government will provide advance notice of the in-force date.

Domestic PEPs and heads of international organisations

The provisions regarding politically exposed persons (PEPs) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) address foreign PEPs only. Bill C-31 includes new definitions of 'politically exposed domestic person' and 'head of an international organisation'. In addition to the current requirements in respect of foreign PEPs, an entity regulated under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) will be required to determine (in certain circumstances set out in the regulations) whether it is dealing with a domestic PEP or a head of an international organisation, or with any prescribed family members or associates of those categories of individual. The amendments do not automatically require senior management approval for an entity to deal with a domestic PEP (as is required to deal with foreign PEPs), but such approval may be required based on the entity's overall risk assessment of the relationship or transaction, including the fact that the person it is dealing with is a domestic PEP.

With the new definition of domestic PEPs, we expect that the regulations will be revised to add requirements in respect of domestic PEPs. It remains to be seen whether the requirements for domestic PEPs will mirror the requirements currently in effect for foreign PEPs. In any event, it is likely that entities regulated under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) will have to change their procedures in respect of PEPs once these changes are in force.

The date on which these changes will come into force has not been announced.

Unregistered foreign money services businesses

Entities regulated under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (including financial institutions, MSBs and securities dealers) will be prohibited from opening or maintaining accounts for, or having correspondent banking relationships with, unregistered foreign MSBs.

The date on which these changes will come into force has not been announced.

Derivatives and benchmarks

The Bank Act (Canada) has been amended to provide that the governor in council may make regulations regarding a bank's activities in relation to derivatives and benchmarks.

This amendment is currently in force, but regulations in this regard have not yet been published.

For further information on this topic please contact Sharissa Ellyn, John Jason or John W Teolis at Norton Rose Fulbright Canada by telephone (+1 416 216 4000), fax (+1 416 216 3930) or email (sharissa.ellyn@nortonrosefulbright.com, john.jason@nortonrosefulbright.comor john.teolis@nortonrosefulbright.com). The Norton Rose Fulbright Canada website can be accessed at www.nortonrosefulbright.com/ca/en/.