The Canadian government made an update of their anti-money laundering regulatory framework, affecting the exchange platforms that operate on “Canadian soil”.
The need for changes in Canada’s anti-money laundering law framework have been a topic for rigorous discussion for a long time. The main purpose of the new laws would be to fill in gaps and eliminate some backdoors in traditional finance. In addition, the legislation covers recognition of “virtual currency exchange” as platforms for transferring value, as part of the amended laws and rules
The new rules’ actions are immediate, obliging every cryptocurrency exchange to register their business activities in Canada under the Money Servicing Businesses (MSB), with full obligations — utilizing a full compliance program and registering their activity with the Financial Transactions and Report Analysis Centre (FINTRAC) too.
The new legislation also introduced exchanges for storing transaction data for movements above CA$10,000. Exchanges will also have to implement identification policies and procedures for acknowledging the sender and receiver of the placed transactions.
“The new legislation doesn’t affect cryptocurrencies themselves. Rather, they are aimed at people or companies that trade virtual assets like exchanges. The ultimate goal is to mitigate the chances of financing terrorism and money laundering, but with no effect on technological innovation,”, the Canadian government stated.
The new regulatory framework goes live months after Gerald Cotton, CEO of Canada-based crypto exchange QuadrigaCX passed away in 2018 without granting access to over $190 million worth of cryptocurrencies. The company quickly shut down operations and filed for bankruptcy in April 2019.