Starting October 11, 2024, the PCMLTFA (Proceeds of Crime Money Laundering and Terrorist Financing Act) will formally restrict all Canadian loan practitioners. This will not only affect the daily work of loan broker licensees, but also everyone's loan applications and even the daily use of bank accounts.
1 ► Impact on loan brokers
From October 11, all loan brokers must comply with the requirements of the PCMLTFA and report or conduct due diligence on their clients' potential money laundering or illegal financing activities. All suspicious records must be kept for more than five years. There are also requirements for reporting virtual currencies, large amounts of cash, and suspected illegal assets.
Before October 11, if a loan broker encountered a suspicious transaction, they could avoid prosecution as long as they were not involved. However, after October 11, if they saw a suspicious transaction but did not report it or conduct due diligence, they would be at risk of having their license revoked or being prosecuted.
2 ► Impact on loan applicants
"Money laundering" and "illegal financing" sound like topics that are far away from everyone. But in fact, in Canada, any cash transaction exceeding 10,000 yuan may involve the issue of "money laundering". Moreover, the PCMLTFA has officially stated that if there are several consecutive cash transactions below 10,000 yuan within one day, but the total amount exceeds 10,000 yuan, it will also be considered as "money laundering". This actually affects many customers who use cash transactions.
Many loan applicants may have heard that someone was blacklisted by a certain bank because of a large amount of cash deposited, which resulted in him being unable to apply for a loan at this bank. After October 11, since every loan broker has the obligation to report, there is a potential risk that these customers who were originally blacklisted by a specific bank will be collectively blacklisted by all major banks in Canada.
PCMLTFA has officially begun to restrict the market transactions of loan brokers, which also means that the future loan industry will attach great importance to the source of income and down payment. Banks now may require that the down payment arrive in 30 days to three months, and there may be stricter requirements in the future, such as longer time requirements, or reasonable explanations and evidence support for each income. For income, if there is cash income, more sufficient evidence will be needed to prove the legitimacy of the source of these income.
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