The new regulations aim to address a number of weak points that the Financial Action Task Force found after their 2015-2016 evaluation, namely to shore up Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime (AML/ATF) laws.
The new regulations will begin treating all crypto exchanges and payment processors as money service businesses (MSB). This would mean that any large transaction of over $10000 Canadian dollars or $7700 USD has to be reported. Meanwhile, the draft set a new Know Your Customer (KYC) threshold will be transactions at $1000 CAD or $770 USD.
The draft legislation also adds a cost-benefit analysis, revealing that the regulations would cost the government around $61 Million CAD or $47 Million USD over the next 10 years.
The founder of Montreal-based blockchain consulting firm Catallaxy Francis Pouliot responded to the new regulations with a tweet saying:
“New requirement: “Large Virtual Currency Transaction Record” means businesses required to ask for and keep details of every transaction over $10,000, like large-cash transaction reports. That’s going to be extremely difficult and invasive to implement. I will object to this.”
The FATF is an intergovernmental organization that aims to develop policies used to combat money laundering. While these policies are not legally binding, Canada believes that the implementation of the proposed regulations will have a positive impact on the nation’s international reputation with regarding financial regulation.