In February of this year, the finance committee of Canada’s government began reviewing proposals for officially regulating cryptocurrencies in their country as a whole. The most prominent proposal was made in June of this year, and their movements of attitude and specific concerns of the reviewing committee are beginning to align with that proposal.
While conducting the review the finance committee held 18 separate meetings, including 70 testimonies from expert witnesses. The PCMLTFA mandates a review only every five years, so this is a crucial time to make major updates to their financial infrastructure.
Ultimately, the regulators in favor of cryptocurrency see no other option in order to curb wide spread money laundering. The proposal lays out clear cut definitions of all things related to cryptocurrencies and their interaction with the traditional fiat systems in place. They acknowledge the power of cryptocurrencies, but also the dangers:
Complete anonymity is possible
Can be accessed globally via online or mobile systems
Allows for the rapid transfer of funds within or across borders
No intermediary required
Characterized by non-face-to-face customer relationships
Can circumvent the “brick and mortar” financial system
Because of this qualities, virtual can be used to facilitate fraud and cybercrime, as well as to purchase illicit goods and services.
In consideration of making no regulatory adjustments vs maintaining the status quo, there is no room for debate according to the proposal:
“Maintaining the status quo was determined not to be viable, given that without these regulatory changes, deficiencies in Canada’s AML/ATF Regime would remain in place. This would compromise the integrity of Canada’s financial system and the security and safety of Canadians at home and abroad. Furthermore, not addressing deficiencies in compliance with FATF standards would have significant adverse consequences for Canada.”
The proposal has several basic updates to the regulations that aim to strengthen Canada’s AML/ATF Regime in the following categories:
Due diligence requirements
Beneficial ownership reporting requirements
Regulations for businesses dealing in virtual currency
updating the schedules to the regulations
Clarifying a number of existing requirements
Minor technical amendments.
In the long term, it assess the proposal with a cost-benefit statement where the proposed amendments are estimated at $1,867,698 (present value [PV]) in benefits with $61,132,622 (PV) in costs, for a net cost of $59,264,925 (PV). This is described over a 10-year period in 2012 dollars. But this does not include the non immediately quantifiable monetary benefits:
“Furthermore, the amendments positively impact Canada’s international reputation, and would lead to regulatory efficiencies with other countries’ anti-money laundering and anti-terrorist financing regimes, making it easier for Canadian businesses to operate internationally.”
By: BGN Editorial Staff