Canada: To Counter Money Laundering, Terrorist Financing, Investment Crowdfunding Platforms Must Register with FINTRAC

Earlier this year, FINTRAC announced that crowdfunding platforms, as well as certain payment providers, must now register with FINTRAC.

FINTRAC is the Financial Transactions Reports Analysis Centre of Canada. It is the agency that seeks to detect, prevent, and deter nefarious activity such as money laundering and the financing of terrorist activities while ensuring the protection of personal information. Recent changes in regulation compels investment crowdfunding platforms to register with FINTRAC as they are now covered as money services businesses (MSBs) or foreign money services businesses (FMSBs) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR).

Securities crowdfunding platforms must:

  • Register with FINTRAC
  • Develop and maintain a compliance program
  • Carry out know your client requirements, including verifying the identity of persons and entities for certain activities and transactions
  • Keep certain records, including records related to transactions and client identification
  • Report certain transactions to FINTRAC

As part of the incorporation of the rules, FINTRAC has scheduled two virtual events on July 19 and July 21st to engage with the agency for Q&A as well as an explanation for non-compliance.

While it is not clear if there has been any actual malfeasance in regards to securities crowdfunding in Canada, the move is part of a broader global push to tighten enforcement of illegal activity as financial services migrate online.


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