In 2014, the Canadian anti-money laundering and counter-terrorist financing (AML/CFT) legislation was amended to include persons “dealing in cryptocurrencies” as “money service businesses” that will be subject to compliance with Canada’s AML regulations. In addition, all businesses dealing in cryptocurrencies will be required to register with the Financial Transactions and Analysis Center of Canada (FINTRAC) and banks will be prohibited from doing business with any businesses that are not registered with FINTRAC. An effective date for these new rules was not specified, however.
Because Canada has become a world leader in cryptocurrencies and blockchains, they are once again looking to update their laws regarding cryptocurrencies with respect to money laundering and terrorist financing. Canada’s advancement in the cryptocurrency world is due in part because Toronto is home to Vitalik Buterin, the inventor of Ethereum Blockchain, which is the most adopted platform worldwide that supports Ether, a cryptocurrency valued at $63 billion USD making it the second highest compared to Bitcoin.
On February 7, 2018, the Standing Committee on Finance released a discussion paper titled “Reviewing Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime” for comments, and at the G20 meeting in March, the world’s economic leaders gathered to discuss the risks posed by blockchain technology and digital taxation which have been receiving a lot of attention regarding their role in tax evasion and money laundering. Cryptocurrencies’ borderless, intangible nature has caused an increase in concerns over security, consumer protection and financial crime and as a result the leaders agreed to implement Financial Action Task Force’s (FATF) anti-money laundering and terrorist financing standards to crypto-assets.
Some people oppose the arguments for AML regulations on cryptocurrencies. One cryptocurrency expert, in particular, expressed his belief that these regulations were excessive or inappropriate and that AML requirements will stifle innovation in Canada. The Chief Scientist of Quebec, Rémi Quirion, commented that “Public concern that cryptocurrencies are being used for illicit activities like tax evasion and money laundering are largely overblown.”
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