Canadian lawmakers are calling for tighter cryptocurrency regulations to cover anti-money-laundering (AML) and illegal activity.
Canada’s move towards further cryptocurrency regulation and transparency reflects the growing trend with governments around the world to tighten the regulatory grip on the industry. The US Securities and Exchanges Commission (SEC) has been particularly active this year in tracking down and prosecuting fraudulent cryptocurrency exchange activity.
The new calls for AML laws follow on from plans for heightened scrutiny of cryptocurrency exchanges, as announced by the Ontario Securities Commission (OSC) earlier this year due to the increase of digital currencies on the market, some of them less reputable than others.
The three new measures were proposed from the House of Commons Standing Committee on Finance (FINA); they include closer monitoring of both cryptocurrency exchanges and wallets. Added to this, MPs are calling for crypto-to-fiat exchanges to be registered as money services businesses, placing exchanges under Financial Transactions and Reports Analysis Centre (FINTRAC) supervision. FINTRAC is Canada’s federal agency for the monitoring of AML and counter-terrorist financing.
The current concern among legislators is that cryptocurrency is used for the financing of illegal activity, a common concern amongst legislators globally. It is an argument which has less traction these days after the results of numerous surveys illustrating that fiat currency is still the preferred financial tool behind organized-crime and terrorist activity. FINA’s proposal suggests:
“Law enforcement bodies must be able to properly identify and track illegal crypto-wallet hacking and failures to report capital gains.”
The government regulatory body also recommends the foundation of a licensing regime similar to that of New York State, whose BitLicense covers financial regulatory issues, independent of FinCEN rules. The Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes.
A decision is yet to be made whether such a bureau should operate on a local level across Canada’s ten provinces or should be overseen by a federal regulator.
The Blockchain Association of Canada is not happy with the new proposals, suggesting that rather than take unilateral action, government authorities should cooperate with cryptocurrency exchanges in detecting any criminal activity.
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