Canada’s Department of Finance revealed a draft document setting out new regulations for cryptocurrency exchanges, posted in their official newspaper - Canada Gazette.
New proposals were drafted based on two major criterias: Anti Money Laundering (AML) and Know Your Customer (KYC).
Earlier, the Financial Action Task Force (FATF), in their evaluation of Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) identified several faults which the new regulations will look to rectify.
The draft document describes Cryptocurrencies as Virtual Currency: “In addition, virtual currencies can be “convertible” or “non-convertible,” depending on whether they can be exchanged for funds. Convertible virtual currencies are vulnerable to abuse for money laundering and terrorist activity financing purposes because they allow greater levels of anonymity, or in some cases complete anonymity, when compared to traditional non-cash payment methods.”
Another proposal in the draft suggests that cryptocurrency exchanges should be considered as MSB’s (Money Service Businesses), and that it should be obligatory to report any transactions higher than 10,000 Canadian Dollars. This means that large business transactions can’t be done anonymously and client details must be provided.
Canadian Government believes that adopting stricter regulations will improve compliance with international standards.
By Nadya Astam