In its 2016 Mutual Evaluation Report (MER), Canada was rated Partially Compliant (PC) with FATF Recommendation 16. This Recommendation pertains to wire transfers, requiring jurisdictions to ensure that financial institutions include accurate originator and beneficiary information and have measures to detect and respond to transfers lacking such data. The 2016 assessment found that Canada lacked specific obligations for intermediary and beneficiary institutions regarding cross-border transfers with missing or insufficient originator data.

Key Reforms

Following the MER, Canada introduced regulatory amendments in 2019 and 2020 to address the identified shortcomings. These amendments were made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its associated regulations. As a result:

• Intermediary and beneficiary institutions are now required to identify cross-border wire transfers that do not carry complete originator information.

• These institutions must take appropriate follow-up action when such deficiencies are identified.

The amendments align Canadian law more closely with FATF standards for traceability and accountability in international funds transfers.

Re-Rating Outcome

The FATF concluded that Canada had addressed most of the deficiencies flagged in its MER regarding Recommendation 16. Therefore, in its 2021 Follow-Up Report, Canada’s compliance rating for R.16 was upgraded from Partially Compliant (PC) to Largely Compliant (LC).

Conclusion

Canada has significantly improved its legal and regulatory framework in response to earlier FATF concerns, particularly with respect to the handling of cross-border wire transfers. The re-rating to Largely Compliant for Recommendation 16 reflects meaningful progress toward greater financial transparency and alignment with international AML/CFT norms. Continued monitoring and refinement of these measures will be essential to achieving full compliance and enhancing the resilience of Canada’s financial system against illicit finance.