New money laundering rules hurt small business

As if the impact of the pandemic, high inflation, high interest rates and supply chain shortages weren’t enough of a drag, the Trudeau government has jumped in with a thick new layer of red tape that will hold small businesses back all across the country.

Here’s the deal. When businesses across the country set up shop and start a new relationship with a bank, they have to go through a long and detailed screening process for the sake of preventing money laundering.

Until very recently, payroll software programs like Quickbooks and FreshBooks could deposit payroll funds into a business’s account and then, in turn, pay the business’s employees through that account without having to go through an additional anti-money laundering screening process. That’s because the business already goes through those protocols upon opening its account with the bank. But the federal government decided to change that. New regulations, which were written up in a rush to clamp down on crowdfunding, will force payroll software companies like Quickbooks and FreshBooks to ensure that the anti-money laundering process occurs twice: once when a business sets up its account with a bank, and a second time before payroll funds are deposited into a business’s account to pay employees.

While the federal government claims it’s all about preventing money laundering, in reality this is government regulation gone wild. These new rules simply duplicate the anti-money laundering process, leading to more paperwork, more working hours lost to red tape and frustration for mom and pop shop owners all across the country. This change does nothing more than hold small businesses back.

The new rules also represent a barrier to the creation of new small businesses. All of this new red tape could mean businesses can’t get off the ground. Some might even choose to operate in cash just to avoid a boatload of complicated and needless regulations. And even if new small businesses do want to go through all this hassle, the cost of using payroll software will soar, as adding burdensome anti-money laundering protocols will force payroll companies to increase prices.

Small businesses are being hammered with needless new regulations at exactly the wrong time. Some are just starting to get off their feet after the pandemic. No less than 740,000 jobs were lost among small businesses thanks to the pandemic and related lockdowns and closures. Some businesses are gone forever, and others are

Read more