Government proposes tougher penalties and more powers for FINTRAC
Canada is bolstering its anti-money laundering framework with proposed legislative changes that will grant its financial crime regulator, FINTRAC, stronger enforcement powers and significantly higher penalties for violations.
The move, announced in the Fall Economic Statement, comes amid growing scrutiny following high-profile compliance failures and an upcoming evaluation by the Financial Action Task Force (FATF).
The proposed amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act include a forty-fold increase in penalties. Companies could face fines up to $20 million per violation notice, while individuals could be fined up to $4 million.
The new measures also introduce criminal charges for reporting entities found providing false or incomplete information, signalling a tougher stance on financial crime.
"The reason for all of these is that Canada is going to be evaluated by the Financial Action Task Force, in addition to recent US regulatory environment and the evolving risks of financial crime," said Alana Scotchmer, a partner at Gowling WLG.
The reforms come after Canadian financial institutions, including TD Bank, faced regulatory penalties for compliance failures. In October, TD Bank was fined more than US$3 billion by US authorities for violations in its anti-money laundering program. Domestically, FINTRAC imposed its largest-ever fine of $9.2 million against TD for failing to submit suspicious transaction reports. Similar penalties were levied against CIBC and RBC in recent years.
Read more: Another TD Bank employee arrested in money-laundering scheme
However, FINTRAC’s historical focus has leaned more toward fostering compliance rather than imposing substantial penalties. Experts warn that this approach could pose challenges for Canadian institutions operating internationally, where stricter regulatory standards are common.
Scotchmer noted that the disparity in penalty structures can create issues for global businesses.
"It simply is a different setup... That has the potential to become problematic with business being so international, particularly for businesses that have a global footprint," she told Reuters.
The enhanced measures also aim to strengthen FINTRAC’s ability to coordinate with other federal agencies responsible for financial oversight. This collaborative approach is expected to fortify Canada’s readiness for FATF’s 2025-2026 review, which will evaluate the country’s effectiveness in combating money laundering and terrorist financing.
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