Canada is going tough on cryptocurrency exchanges and starting 1st of June 2020 all cryptocurrency exchanges in the country would be required to register with relevant authorities as an anti-money laundering measure.
A recent move by the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) has demonstrated that the country is making every effort possible to curb money laundering. The mandatory registration in Canada would be put into action along with other financial regulations planned for 2020.
Canada boosts its fraud and abuse laws
The regulations against money laundering and terrorist financing activities were long due, and the recent action from the government comes as a strong reminder for Canada’s zero-tolerance towards financial crimes.
The exchanges will also be required to comply with Know Your Customer (KYC) policies, which mandates authenticating customer identities and verifying transactions. Moreover, they will need to appoint a Compliance Officer to safeguard against any suspicious financial activity.
In a move to encourage Canadian banks in joining forces to combat financial misdeeds, Lori Stein, a partner at a prominent business law firm in Canada, remarks that the government’s approach will prevent deceitful practices to a large extent, given the involvement of banks, exchange platforms, and other financial institutions in closely monitoring every transaction.
Two sides of every story
However, as the popular saying goes, there is a downside to everything. Stein indicates that the move may drive away international exchange set-ups which are unwilling to get on board. It may also deter the establishment of new services.
Blockchain-based firm Bitaccess’ CEO, Moe Adham, points out his concern to Global and Mail,
“I expect to see a number of firms relocate outside of Canada, as well as international firms limiting access to Canadians.”
Canadian crypto exchange company, Coinsquare, remarks that Canada has been viewed as one of the most crypto tolerant nations so far. Regulatory policies such as these will not only ruin the image but also prevent customers from doing business with the exchange.
“Customers who do not want to reveal their information to exchanges would likely just transact with each other directly.”
The new regulations may have flaws; however, in light of the severity of implications that may arise due to fraudulent practices, it will be prudent for companies to establish a fair compliance culture.