The Parliament of Canada has passed a bill that amends the country’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act of 2000 to extend to both foreign and domestic businesses working in the bitcoin and digital currency sectors in Canada.

Bill C-31, known formally as “An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014”, has potentially far-reaching implications for all bitcoin businesses currently serving the Canadian market, and was first introduced in March.

On 19th June, it received Royal Assent, thereby officially becoming law, though additional approval will be needed before the regulation can be enforced.

The amendment does not name bitcoin directly, but rather refers to businesses “dealing in virtual currencies”. Members of Canadian bitcoin ecosystem have reached out for formal clarification. However, previous discussion of the bill by the country’s then finance minister Jim Flaherty suggests the measures are indeed intended to cover bitcoin.

Once enforced, the law would regulate bitcoin businesses as money services businesses (MSBs), a determination that would impose record keeping, verification procedures, suspicious transaction reporting and registration requirements on bitcoin businesses seeking to engage its citizens in digital currency-related financial services.

The text of the amended law reads:

“Division 19 of Part 6 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things, enhance the client identification, record keeping and registration requirements for financial institutions and intermediaries, refer to online casinos, and extend the application of the Act to persons and entities that deal in virtual currencies and foreign money services businesses.”

Additionally, bitcoin businesses would be required to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and face restrictions if they fail to do so.

Christine Duhaime, a Canada-based financial crime and certified anti-money laundering (AML) specialist, wrote in her assessment that bitcoin entities could be prohibited from traditionally opening bank accounts if they are not registered with FINTRAC.

Duhaime told CoinDesk:

“[The law applies to] bitcoin businesses in Canada providing services to Canadians, but it also applies to ones outside of Canada targeting Canadians … For bitcoin businesses outside Canada, the correspondent banking relationships will apply, meaning that banks anywhere basically will have to make sure that when they’re providing bitcoin services that those bitcoin services are compliant with the law in Canada.”

Amber Scott, vice president of AML at Canadian consultancy Bitcoin Strategy Group, further explained:

“This will affect anyone serving Canadian customers in Canada. For example, if you’re a Dutch company offering ATMs in Holland, and I as a Canadian buy BTC from an ATM in Holland, there’s no impact. But, if the same company offers an online exchange and I access that exchange from Canada, they’re captured under the law.”

Scott added: “The penalties for non-compliance can be fairly significant. In addition to the financial implication, the regulator also has the ability to publish the names of companies found to be in violation (which is generally the kiss of death as far as maintaining or establishing any banking relationships).”

The measures are part of a wide-ranging bill meant to strengthen the country’s domestic AML policies and terrorist financing efforts.

CoinDesk is monitoring this developing story.