Crowdfunding, payment platforms face new KYC rules

Crowdfunding platforms and payment services are now required to register and comply with federal anti-money laundering (AML) rules, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) says.

In new guidance, the federal anti-money laundering agency said that revisions to AML legislation and regulations have taken effect that require crowdfunding platforms and payment providers — firms that provide services, or enable people to raise funds, including crypto assets — to register as money services businesses.

As a result, these firms are also required to develop and maintain compliance programs to adhere to AML rules, to meet certain “know your client” (KYC) requirements, to keep records (including data on transactions and client identification), and to report suspicious transactions to FINTRAC.

Additionally, the agency noted that the definition of “electronic funds transfers” (EFTs) has been updated. This may affect registered money services businesses, particularly firms that remit and transmit funds.

Firms that carry out credit/debit card transactions, “now have to comply with EFT obligations, including client identification, reporting and record keeping requirements,” FINTRAC said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.