Canada has become one of the first countries in the world to require online crowdfunding platforms to report to their anti-money laundering and anti-terrorist financing oversight body, government officials told a special commission examining the truck convoy protest and the steps. taken by the government to put an end to it.
Finance officials said the new regulations went into effect last week, adding crowdfunding platforms and some payment processing companies to the list of companies required to report large or suspicious transactions to the Center for Financial Transaction Analysis and Reporting. Canada’s Financial Intelligence Unit.
Barry McKillop, FINTRAC’s deputy intelligence director, said the regulations closed a gap that could be exploited.
“Of course, I believe that their compliance with the Law on Income from Criminal Activity, Money Laundering and Terrorist Financing would act at least as a deterrent for anyone who would like to use a group funding platform to engage in wicked activities. “Said McKillop MPs and senators on the committee set up to investigate the government’s use of the Emergency Situations Act.
Millions raised in GoFundMe, GiveSendGo
Julian Brazo, director general of the financial crime and security department of the finance department, said Canada was the first country to require group funding platforms to report transactions to an authority such as FINTRAC.
This move means that some large donations over $ 10,000 to Canadian fundraising campaigns organized by online crowdfunding companies such as GoFundMe or GiveSendGo, or which the platform believes may be suspicious, can now be reported to FINTRAC and beyond. this could potentially be reported to the police.
The power of crowdfunding companies to raise money was in the spotlight earlier this year after organizers of a truck convoy protest – which paralyzed downtown Ottawa for three weeks and blocked various border crossings – successfully raised millions of dollars from donors. from Canada and abroad, first on GoFundMe and then on GiveSendGo.
The government first required group funding platforms to report to FINTRAC as part of the Emergency Economic Action Order, which it passed when it invoked the Emergency Situations Act to allow protests against the truck convoy. When the state of emergency was lifted, this requirement was dropped. However, the government telegraphed plans to require crowdfunding platforms to report to FINTRAC in its budget last month, then published new regulations on April 27 in The Canada Gazette.
In an explanation accompanying the regulations, the government said the International Working Group on Financial Action had identified group funding platforms “as a emerging area of risk for terrorist financing”.
The fact that crowdfunding platforms are not required to report certain transactions to FINTRAC poses a “serious and immediate risk to the security of Canadians and to the Canadian economy,” it said.
“This risk was highlighted in early 2022, when illegal blockades were carried out in Canada, which were partly funded through group financing platforms and payment service providers. Allowing these gaps to continue poses a risk to the integrity and stability of the financial sector and the wider economy, as well as a reputational risk to Canada. “
New rules
The regulations will introduce a number of new requirements for crowdfunding platforms.
“Obligations include registering with FINTRAC, reporting requirements (including suspicious and high-value transactions), record keeping, due diligence and developing a compliance program,” the government wrote.
The regulations include transactions in both traditional and virtual money such as cryptocurrencies and “apply to local legal entities as well as to foreign entities when targeting Canadians”.
Workers used heavy equipment to remove temporary fences and supplies from the parliamentary section on February 23rd. (Adrian Wyld / The Canadian Press)
The government said approximately 1,000 crowdfunding platforms and additional payment processors will now have to report to FINTRAC. According to him, this will cost the platforms a total of 18-20 million dollars over the next 10 years as administrative and compliance costs.
Much of the committee’s hearing Tuesday night focused on the provisions of the Emergency Situations Act, which led to the freezing of 280 bank accounts or other financial accounts for several days. Deputies and senators asked the employees of the finance department and FINTRAC with questions, wanting to understand why and how this was done. Conservative MP Glenn Motz said the move has shaken the confidence of many Canadians in government and Canadian banks.
Assistant Deputy Minister Isabel Jacques said the measure was taken to stem the flow of money to the protest and to dissuade protesters from staying on Parliament Hill. After they left the protest, their accounts were unfrozen, and all accounts were unfrozen by February 24. Jacques pointed out that financial institutions must decide which accounts to be frozen, based on information provided by the RCMP.
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