What Bill S-8 Would Do

Sweeping New Ministerial Powers

Money services businesses (MSBs) offer services such as remittances, currency exchange and digital payments. Bill S-8 would give the Minister of Finance a new toolkit to intervene directly in the registration and activities of MSBs and other registrants whenever the Minister “is of the opinion” that doing so is necessary for reasons related to national security or to safeguard the integrity of Canada’s financial system. Neither “national security” nor the “integrity of Canada’s financial system” is defined. Among other things, the Minister could do the following:

review any registration application or existing registration within a 180-day period that the Minister may extend any number of times, and require the business to provide any additional information that the Minister requests;
direct FINTRAC to treat an applicant or registrant as ineligible for registration, or to temporarily suspend processing registration applications from all MSBs or a class of MSBs;
by order, require undertakings, impose conditions, or direct an applicant or registrant to take or refrain from taking any measure in carrying out its registered activities. This includes temporary orders made before the business has an opportunity to make representations if the Minister believes the delay could harm the public interest; and
extend enhanced due diligence directives and transaction limits to domestic transactions in addition to foreign ones.

Importantly, a business that is found ineligible by ministerial directive under the proposed new discretionary power could not seek a review by FINTRAC’s director; its only recourse would be to ask the Minister to reconsider his or her own directive. FINTRAC would also have to disclose to the Minister, on request, any information under its control that the Minister considers relevant to these powers.

In addition to registration-related measures, the Minister would be granted powers to make regulations limiting or prohibiting financial transactions, including on a new ground: a significant risk that a reporting entity may be facilitating the financing of threats to Canada’s security. In doing so, the Minister could take into account any circumstance he or she considers relevant. The Minister could also designate persons to demand information, enter business premises and examine records to verify compliance with ministerial undertakings, conditions and orders, and could seek court orders to enforce these measures.

Registration requirements for MSBs would also be tightened. An MSB would be ineligible to register under the Act if its payment service provider registration under the Retail Payment Activities Act (RPAA) is refused or revoked for national security reasons. Criminal record checks would also be imposed on owners and investors holding 5% or more of an MSB’s shares, down from 20%.

Prohibitions on Unlicensed Crypto ATMs and Large Cash Transactions

Operating, hosting or loading cash into a crypto ATM would become a criminal offence unless the operator holds a provincial licence for that machine. All operators would have to verify users’ identities, keep records, report each transaction to FINTRAC within 15 days, cap each user’s total transactions at $1,000 per 24 hours and provide FINTRAC with details about each machine, including its location and source of cash. Breaches, which include exceeding the $1,000 limit, would attract administrative monetary penalties or fines under the PCMLTFA.

Banks and other specified entities could not hold accounts for unregistered crypto ATM operators in Canada.

Furthermore, it would become an offence for any business, professional or person soliciting donations from the public to accept $10,000 or more in cash, whether in a single transaction or in a prescribed series of related transactions. On conviction on indictment, the fines could reach three times the amount accepted.

Banks and other deposit-taking institutions would be exempt from this restriction, and further exemptions could be set by regulation. However, Bill S-8 proposes the creation of a new third-party deposit offence that would bar deposit-taking institutions from accepting cash deposits into an account from anyone other than the account’s holder or a person authorized on the account.

In its backgrounder on Bill S-8, the Department of Finance noted that Canada is currently the only G7 country, other than Japan, without such a framework to regulate large cash transactions.

Other Measures: Mail Searches and Information-Sharing

Law enforcement agencies could use their existing powers under the Criminal Code, the Controlled Drugs and Substances Act or the Cannabis Act to demand, seize, detain or retain mail sent through Canada Post, as they already can for items sent by private courier. Police would have to notify Canada Post in writing within 60 days of doing so.

The RCMP or a prescribed agency could also share personal information with regulated businesses to help detect or deter money laundering, terrorist financing or sanctions evasion. Those businesses could then collect and use that information without the consent of the individual concerned, and would be immune from civil and criminal proceedings if they did so in good faith.

Bill S‑8: Canada Moves to Tighten Its Anti‑Money‑Laundering Regime

En cours de traduction.

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