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Canada’s financial intelligence unit wants to expand reporting requirements and introduce other anti-money laundering related measures ahead of a global evaluation scheduled for December 2025, an official with the agency said at an industry conference in Toronto on Wednesday.

Banks and other financial institutions must file suspicious transaction reports, or STRs, to the Financial Transaction Analysis Centre of Canada, also known as Fintrac, only when flagging potentially illicit payments, precluding them from bringing a broader range of possible case leads, such as unusual customer behavior, to the agency’s attention.

But Canadian officials have discussed potentially switching their country from a suspicious-transaction-reporting to a suspicious-activity-reporting model by amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Act with lawmakers, Fintrac Director Sarah Paquet told attendees of the ACAMS Assembly Canada on Wednesday.

SARs would encompass transactional as well as non-transactional events, such as frequent changes in account access and ownership and unusual, suspicious questioning of bank tellers.

“We are going to review the PCMLTFA again this year, and this question of reporting suspicious activity is going to come up,” Paquet said Wednesday morning. “There’s also the question of real-time reporting.”

Financial institutions must currently file STRs on any attempted or completed transactions they suspect of links to money laundering or terrorist financing.

Canadian officials last reviewed the PCMLTFA in November 2018, at which point the concept of a pan-Canadian beneficial-ownership registry emerged.

They revised the legislation to authorize broader sharing of financial intelligence and newly require virtual asset service providers to implement AML programs, among other measures.

Beneficial owners

Whereas the debate on swapping out STRs for SARs in Canada has yet to conclude, further development of the country’s beneficial-ownership reporting regime ranks as a priority.

FATF assessed Canada as only partially compliant with the group’s technical standards for corporate transparency in 2016, citing a lack of an “appropriate” mechanism that would obligate financial institutions to not only collect, but also verify, beneficial ownership information.

Canada’s beneficial-ownership database went live in January, requiring all federally registered legal entities to begin submitting the full legal names and service addresses of any individuals who own at least 25 percent of their shares or otherwise control them to Corporations Canada, along with a description of the nature of their control and when they began wielding it.

Safeena Alarakhia, director of Canada’s Finance Department, told attendees Wednesday that officials may eventually require banks, accounting firms, real estate agencies and other parties required to identify the beneficial owners of the legal entities they serve to check the details they collect against what those parties filed for inclusion on the national database.

“One way to make sure information in accurate and to make sure Corporations Canada is equipped to enforce compliance with reporting requirements is to have reporting entities report instances in which they see material and significant discrepancies,” Alarakhia said.

Instead of registering federally, most legal entities in Canada register with one of the country’s 13 provincial and territorial governments, making their participation in the national beneficial-ownership initiative essential.

Quebec launched its own provincial-level beneficial-ownership database in March of last year. Ontario, where more than 455,000 legal entities held registration as of December 2022, is expected to follow suit, as is British Columbia.

Alarakhia declined to clarify whether financial institutions will have to automatically compare the ownership information they obtain from legal-entity customers against the details those same entities filed to Corporations Canada, or only do so when they suspect a discrepancy.

“The regulations are coming soon,” Alarakhia said. “We have consulted extensively on this and we are trying to take a very pragmatic approach.”

Contact Chelsea Carrick at ccarrick@acams.org