Canada: FINTRAC Requires Charity Platforms to Comply with AML/KYC Rules, NCFA Criticizes Regulatory Move

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is now requiring charity platforms to perform AML/KYC processes on transactions.

FINTRAC already requires crowdfunding platforms that provide services to raise funds or virtual currency and certain payment service providers to register as money services businesses (MSBs) or foreign money services businesses (FMSBs).

The FINTRAC outline of requirements is available here.

The National Crowdfunding and Fintech Association of Canada has recently issued a statement on updates to reporting that include charity platforms.

NCFA explains that AML/ATF (anti-terrorist financing) registration, reporting, and other requirements on donation platforms were created by the federal government but “did not properly consult on the amendments to the Regulations.”

NCFA states:

“Donation platforms were given no time to register with FINTRAC and ensure their compliance programs, policies and procedures were updated to comply. So, they were immediately in a position of non-compliance. FINTRAC says it will “focus its compliance activities on registration requirements and educating impacted sectors”. In our view, this is not a proper way to “work around” immediate coming into force.”

NCFA questions any benefit generated by the new rules adding that it adds costs to platforms while asking if there is any data to support these changes. Donations of over $1000 are not required to be reported and verified.

NCFA quotes Daryl Hatton, Founder and CEO of FundRazr, Canada’s largest donation crowdfunding:

“The new requirements will impose a very costly burden on community service crowdfunding platforms while providing no real added benefits. These costs will impede the successful delivery of fundraising services that help the Canadian nonprofit/charitable sector fund social services programs.”

NFCA calls the new rules a “knee jerk” reaction by regulators and while no one supports nefarious activities regulators have fallen short in their mission and done more harm than good.

NCFA’s statement is available here.

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