Canada is implementing significant changes to its anti-money laundering (AML) framework through proposed legislative amendments aimed at strengthening enforcement and increasing penalties for non-compliance. These updates, introduced in the Fall Economic Statement, will expand the authority of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and significantly raise fines for violations.
Under the proposed changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, penalties for non-compliance will increase substantially. Companies may face fines of up to $20 million per violation notice, while individuals could be fined up to $4 million. Additionally, new criminal charges will apply to entities found providing false or incomplete information, reinforcing stricter regulatory oversight.
These measures follow increased scrutiny of Canada’s financial compliance framework, particularly in light of an upcoming evaluation by the Financial Action Task Force (FATF). Alana Scotchmer, a partner at Gowling WLG, highlighted the broader regulatory context influencing these changes, including evolving financial crime risks and developments in U.S. regulatory practices.
The reforms also come after Canadian financial institutions, including TD Bank, faced regulatory penalties for AML violations. In October, TD Bank was fined over US$3 billion by U.S. authorities for deficiencies in its anti-money laundering program. Domestically, FINTRAC issued a record fine of $9.2 million against TD Bank for failing to submit suspicious transaction reports. Other Canadian banks, such as CIBC and RBC, have also been subject to similar enforcement actions in recent years.
Historically, FINTRAC has primarily focused on fostering compliance rather than imposing significant penalties. However, industry experts suggest that aligning Canada’s enforcement approach with stricter international standards is necessary for businesses operating in global markets. Scotchmer noted that differences in penalty structures between jurisdictions could pose challenges for international firms, particularly those with a global presence.
Beyond financial penalties, the proposed changes aim to enhance collaboration between FINTRAC and other federal agencies responsible for financial oversight. This coordinated approach is intended to improve Canada’s readiness for FATF’s 2025-2026 evaluation, which will assess the country’s effectiveness in combating money laundering and terrorist financing.
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