The regulatory landscape is changing for auto dealerships in Canada effective April 1, 2025.
As of April 1, 2025, dealerships that "offer" financing or leasing services will be subject to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) anti-money laundering (AML) regulations. These new requirements mean that dealerships must implement a "comprehensive" AML compliance program to remain compliant and avoid penalties.
Who is Impacted?
If your dealership offers vehicle financing or leasing to customers, you must comply with FINTRAC's regulations. This change expands FINTRAC's scope beyond traditional financial institutions to include dealerships that facilitate these transactions. FINTRAC defines financing and leasing companies as persons or entities engaged in the business of financing or leasing of:
- Property for business purposes (excluding real property or immovables)
- Property valued at $100,000 or more (excluding real property or immovables)
- Passenger vehicles in Canada
A passenger vehicle is defined as any motor vehicle designed or adapted to carry no more than 10 individuals on highways and streets, excluding ambulances, hearses, clearly marked police or emergency response vehicles, and utility trucks.
Penalties for Noncompliance
Failure to comply with FINTRAC's requirements can result in significant consequences, including:
- Financial penalties
- Reputational damage
- Increased scrutiny from regulatory authorities
Ensuring compliance is crucial to protecting your business and maintaining customer trust.
How to Comply with FINTRAC
To meet FINTRAC's requirements, dealerships must establish a robust AML compliance program. This includes:
- Developing Policies & Procedures: Clearly outline how your dealership will detect and prevent money laundering activities.
- Risk Assessment: Identify and assess potential money laundering risks within your operations.
- Record-Keeping & Reporting: Maintain proper records and report suspicious transactions to FINTRAC.
- Employee Training: Educate staff on AML regulations and how to recognize suspicious activity.
- Ongoing Monitoring: Regularly review transactions to detect potential risks.
Get Expert Support
Navigating AML compliance can be complex. Seeking external support can help you understand your obligations and implement an effective AML program tailored to your dealership. With the accelerated compliance deadline of April 1, 2025, it is essential to start preparing now to ensure your dealership meets FINTRAC's Anti-Money Laundering (AML) requirements in time.
Note: FINTRAC has announced a transition period until April 1, 2026, during which it will focus on outreach and guidance activities to support newly affected Reporting Entities in achieving compliance.
KRP's Consulting Team can assist you in understanding and implementing the required AML compliance programs. To learn more, please contact Neha Desilets.