Canada

TECHNICAL COMPLIANCE ANNEX
Weighting and Conclusion:
Canada is non-compliant with R.25.
Recommendation 26 – Regulation and supervision of financial institutions
In the 2008 MER, Canada was rated PC with former R.23 due to the exclusion from the AML/CFT
regime of certain sectors without proper risk assessments, an unequal level of supervision of
AML/CFT compliance, lack of a registration regime for MSBs and concerns around fit and proper
screening requirements. Canada made significant progress since then.
Technical compliance Annex
Criterion 26.1— FINTRAC is the AML/CFT supervisor for all REs subject to the PCMLTFA. It is
assisted in the regulation and supervision of FIs by other federal and provincial regulators that are
responsible for prudential and conduct supervision. However, ultimate responsibility for supervision
and sanctioning under the PCMLTFA remains with FINTRAC. It is estimated that 80% of Canada’s
financial sector market is controlled by FRFIs. FRFIs are under the supervision of OSFI and include
six large conglomerates (DSIBs) that hold a substantial share of the financial sector and other
financial entities such as banks, insurance companies, cooperative credit and retail associations,
trust companies and loan companies. OSFI’s powers are mandated under the OSFI Act and governing
legislation for the various financial sectors such as the Bank Act, Trust and Loan Companies Act,
Insurance Companies Act and Cooperative Credit Associations Act. Non-FRFIs (e.g. credit unions) are
regulated and supervised by provincial regulators under provincial statute.
AML/CFT supervisory functions are concentrated in FINTRAC and have not been delegated to
primary regulators in Canada. At the federal level, OSFI and FINTRAC concurrently assess FRFI’s for
compliance with AML/CFT compliance obligations and are moving to a joint examination process
(see further details below). At the provincial level, FINTRAC conducts AML/CFT supervision on non-
FRFIs with the cooperation of other supervisors and has signed 17 MOUs with supervisors in
relation to non-FRFIs. FINTRAC is authorized to share information with primary regulators at
national and provincial levels relating to AML/CFT to monitor compliance with the PCMLTFA, and
such regulators are also authorized to share information with FINTRAC.
Market Entry
Criterion 26.2— Federal and provincial authorities are the primary regulators of FIs with
responsibility for prudential and conduct supervision including the licensing and registration of
market entrants. FINTRAC is responsible for the registration and supervision of MSBs (along with
AMF for MSBs operating in Quebec).
Market entry rules for FRFIs are set out in the relevant federal governing legislation and the process
is entirely under the control and direction of OSFI. The Minister of Finance is responsible for
approving Letters Patent creating domestic FRFIs, and for authorizing foreign banks and life
insurance companies to operate branches in Canada by means of Ministerial Orders. OSFI is
responsible for managing the process leading up to Ministerial actions. Authorized banking is
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Anti-money laundering and counter-terrorist financing measures in Canada - 2016 © FATF and APG 2016