The government’s review started in February and is looking to to bring under the law entities such as non-federally regulated mortgage lenders, privately owned automated-teller machines, horse-betting businesses, financing and leasing firms, high-value goods dealers and jewelry auction houses, among others.

Some of these businesses operate with little regulatory obligations so the implementation of these proposals would create a significant need for compliance procedures, said Koker Christensen, partner in the financial institutions group of law firm Fasken Martineau Dumoulin LLP.

The government signaled it is aware of the potential financial and operational burdens and of privacy concerns an expanded regime could bring to some firms.

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“In evaluating each measure, the costs of addressing the identified risk must be weighed against the potential benefit of preventing or tracing [money laundering/terrorist financing] activity in the identified sectors,” said the government in its consultation paper.

Addressing concerns

The regime review aims to address some of the concerns raised by a Financial Action Task Force review published in 2016 that found Canada should expand the sectors it covers and strengthen transparency. The FATF is an inter-governmental body focused on combating money laundering and terrorist financing risks in the global financial system.

The G20 countries said they are committed to establishing beneficial-ownership registers to facilitate the identification of the people behind corporate entities.

Canada doesn’t have a central registry of beneficial owners; information on entities is “spread across a number of different statutes,” according to the consultation paper. Around 9% of corporations are established under the federal statute and most are incorporated at the provinces and territories, it said.

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