FINTRAC compliance 2025: New AML rules for Canadian businesses

Canadian businesses face a seismic shift in anti-money laundering (AML) compliance as regulatory bodies worldwide issued over $6 billion in AML fines in the first half of 2025 alone ¹. The landscape changed dramatically on June 3, 2025, when Canada's federal government introduced Bill C-2, the Strong Borders Act, bringing unprecedented penalties that could reach up to C$20 million for very serious violations – a 40-fold increase from current maximums ². With the Financial Action Task Force (FATF) scheduled to begin its mutual evaluation of Canada's AML regime in late 2025, businesses need robust compliance infrastructure now more than ever ³.

Understanding the Strong Borders Act: what changes for your business

The Strong Borders Act represents the most significant overhaul of Canada's AML framework in decades. Under the new legislation, all reporting entities except money services businesses will be required to enrol with FINTRAC and renew their enrolment periodically ². This mandatory registration requirement extends far beyond traditional financial institutions.

As of April 1, 2025, financing and leasing companies, factoring companies, and cheque-cashing companies became reporting entities under the PCMLTFA ³. These newly designated entities must now implement comprehensive AML programs that meet stringent regulatory standards. The expansion reflects Canada's commitment to closing regulatory gaps that could be exploited for financial crime.

Perhaps most striking is the comprehensive ban on accepting cash payments of C$10,000 or more by all businesses and charities in the Canadian economy ². This prohibition applies to single transactions and prescribed series of related transactions, fundamentally changing how Canadian businesses handle large cash transactions. Financial entities face additional restrictions, as they will be prohibited from accepting third-party cash deposits ³.

The new penalty framework: understanding your exposure

The penalty structure under Bill C-2 transforms enforcement risk for Canadian businesses. Currently, violations are categorized into three classes carrying maximum penalties of C$1,000, C$100,000, and C$500,000 for minor, serious, and very serious violations respectively ². The new framework increases these maximums to C$40,000, C$4 million, and C$20 million respectively – a 40-fold increase across all categories ³.

Cumulative penalties for multiple violations will be capped at C$20 million or 3% of global revenue, whichever is greater, applied at the group level for affiliated entities ². For some very large Canadian reporting entities, this 3% cap could result in penalty ceilings exceeding C$1 billion based on reported gross revenues ³. To put this in perspective, the largest cumulative public penalty imposed by FINTRAC to date is below C$10 million ².

The Bill also introduces a new factor in penalty determination: a reporting entity's ability to pay, subject to strict evidence requirements ³. However, this consideration won't necessarily reduce penalties for well-resourced organizations. Criminal fines also see dramatic increases, ranging from C$2.5 million to C$20 million depending on the offence – a tenfold increase or more ².

Global enforcement trends: lessons from international penalties

The global enforcement landscape provides sobering context for Canadian businesses. Cryptocurrency Exchange OKX was fined over $500 million by the US Department of Justice on February 24, 2025, after aiding over $5 billion in suspicious transactions due to inadequate KYC and AML frameworks ¹. The penalty included $84 million in civil fines and a forfeiture of $420 million in illegal proceeds ¹.

Traditional financial services companies haven't escaped scrutiny either. Block Inc. was fined US$40 million by the New York Department of Financial Services on April 10, 2025, for non-compliance with the US Bank Secrecy Act, after discovering over 8,300 Cash App accounts tied to a Russian criminal network ¹. Robinhood faced a $29.75 million charge from FINRA on March 7, 2025, for weak AML oversight, including a $3.75 million fee to affected customers ¹.

These enforcement actions demonstrate that regulators are taking an increasingly aggressive stance toward AML violations across all sectors. The Central Bank of the UAE fined an exchange house almost $55 million on May 22, 2025 – the largest fine of its kind in the UAE – with the branch manager personally fined AED 500,000 and prohibited from holding future positions in licensed financial institutions ¹.

New reporting obligations: what you need to track

Bill C-2 introduces comprehensive new reporting requirements that extend beyond traditional transaction monitoring. Importers, exporters, bonded warehouses, producers, and logistics partners must now declare whether goods are proceeds of crime or tied to money laundering, terrorist financing, or sanctions evasion ³. This requirement, effective April 1, 2025, creates new compliance obligations for supply chain participants who may not have previously considered themselves within the AML regulatory perimeter.

The legislation also expands information-sharing provisions, permitting reporting entities to share an individual's personal information with each other without consent when reasonable for detecting or deterring money laundering, terrorist financing, or sanctions evasion ³. FINTRAC will be permitted to disclose information to the Commissioner of Canada Elections where there are reasonable grounds to suspect relevance to contraventions of the Canada Elections Act ².

The Bill creates a new violation for failure to ensure compliance programs are "reasonably designed, risk-based and effective" ². This shifts the focus from checkbox compliance to demonstrable effectiveness, requiring businesses to continuously evaluate and improve their AML programs. Any reporting entity found in violation must enter into a mandatory compliance agreement with FINTRAC, with failure to comply attracting penalties up to C$30 million or 3% of gross global revenue, whichever is greater ³.

Building robust compliance infrastructure with modern solutions

Navigating these new requirements demands sophisticated compliance infrastructure that can adapt to evolving regulations. Modern financial services platforms provide the technological foundation necessary for comprehensive AML compliance. For businesses operating internationally, having a partner with established compliance frameworks becomes crucial ⁴.

Effective compliance programs now require real-time transaction monitoring, automated suspicious activity detection, and comprehensive audit trails. The ability to track and report on cross-border transactions becomes particularly important as businesses expand globally. Companies sending money to high-risk jurisdictions need robust KYC procedures and transaction monitoring capabilities ⁵.

The new requirement for compliance programs to be "risk-based and effective" means businesses must implement dynamic risk assessment methodologies. This includes evaluating customer risk profiles, transaction patterns, and geographic exposure. For companies managing multiple currency accounts, having integrated compliance controls across all currency holdings becomes essential ⁶.

Technology's role in compliance automation

Automation plays a critical role in meeting the enhanced reporting obligations under Bill C-2. Manual processes that may have sufficed under the previous regime won't scale to meet the new requirements. Businesses need systems that can automatically flag transactions approaching the C$10,000 cash threshold and prevent prohibited third-party deposits.

Modern compliance platforms integrate machine learning algorithms to identify suspicious patterns that human reviewers might miss. These systems continuously learn from global enforcement actions and emerging typologies, helping businesses stay ahead of evolving money laundering techniques. For companies operating across multiple jurisdictions, having a unified compliance platform that can adapt to different regulatory requirements becomes invaluable ⁷.

The expansion of information-sharing provisions under Bill C-2 also requires secure data exchange capabilities. Businesses need infrastructure that can facilitate compliant information sharing while maintaining data privacy and security. This becomes particularly complex for companies operating internationally, where data protection regulations may conflict with AML information-sharing requirements.

Preparing for FATF evaluation: international standards matter

With the FATF scheduled to begin its mutual evaluation of Canada's AML regime in late 2025, Canadian businesses must align their compliance programs with international standards ³. The evaluation will assess not just the legal framework but also its effectiveness in practice, making robust implementation crucial.

International businesses operating in Canada face additional complexity as they must navigate both Canadian requirements and their home jurisdiction's regulations. Companies with operations in multiple countries need compliance infrastructure that can adapt to varying regulatory requirements while maintaining consistent standards ⁸.

The FATF evaluation will likely scrutinize how effectively Canadian businesses identify and report suspicious transactions, particularly in high-risk sectors. Companies dealing with emerging payment methods, cryptocurrency, or complex international transactions will face heightened scrutiny. Having demonstrable compliance processes and clear audit trails becomes essential for surviving regulatory reviews.

Risk-based approach: tailoring compliance to your business

Bill C-2's emphasis on risk-based compliance requires businesses to move beyond one-size-fits-all approaches. Companies must assess their specific risk factors, including customer types, product offerings, delivery channels, and geographic exposure. This assessment must be documented, regularly updated, and reflected in the compliance program's design.

For businesses in wholesale banking or complex financial services, the risk assessment becomes particularly nuanced ⁹. Factors such as transaction volumes, average transaction sizes, and counterparty types all influence the risk profile. Companies must implement controls proportionate to their identified risks while ensuring they meet minimum regulatory requirements.

The new framework also requires businesses to consider emerging risks, including those related to new technologies and payment methods. As digital payment adoption accelerates, companies must ensure their compliance programs evolve accordingly. This includes understanding the money laundering risks associated with instant payments, digital wallets, and cross-border payment platforms.

Implementation timeline and transition strategies

While Bill C-2 was tabled on June 3, 2025, and may take effect later this year if passed, businesses shouldn't wait for final passage to begin preparation ³. The scale of changes required means implementation will take months, not weeks. Companies should begin assessing their current compliance gaps and developing remediation plans immediately.

Violations alleged to have been committed before the new provisions come into force will be subject to the existing AML framework, while those occurring afterward will face the new, dramatically increased penalties ². This creates a critical transition period where businesses must ensure continuous compliance while implementing new systems and processes.

Priority areas for immediate action include:

• Conducting comprehensive risk assessments to identify compliance gaps

• Implementing systems to track and prevent cash transactions over C$10,000

• Establishing FINTRAC enrolment processes and renewal procedures

• Upgrading transaction monitoring and reporting capabilities

• Training staff on new requirements and penalties

• Reviewing and updating compliance policies and procedures

Cross-border considerations for international businesses

Canadian businesses operating internationally face unique challenges under the new regime. The requirement to assess whether imported or exported goods are proceeds of crime adds complexity to international trade operations. Companies must implement due diligence procedures for international counterparties while maintaining operational efficiency.

For businesses managing international payments, having robust compliance infrastructure becomes even more critical. The ability to screen transactions in real-time, maintain comprehensive records, and generate required reports across multiple jurisdictions requires sophisticated technology solutions ¹⁰.

The expansion of information-sharing provisions also has international implications. Canadian businesses may need to share information with foreign counterparts or regulators, requiring careful navigation of privacy laws and international agreements. Companies should review their data governance frameworks to ensure they can meet these obligations while protecting sensitive information.

Building a culture of compliance

Beyond systems and processes, successful AML compliance requires embedding a compliance culture throughout the organization. The dramatic increase in penalties under Bill C-2 makes individual accountability more important than ever. Senior management and boards must take active roles in overseeing compliance programs.

Training becomes crucial as employees at all levels need to understand their compliance obligations. This includes recognizing red flags, understanding reporting requirements, and knowing escalation procedures. With penalties potentially reaching into the billions for large organizations, every employee becomes a critical line of defense.

Regular testing and independent review of compliance programs will become standard practice. Businesses should establish internal audit functions or engage external reviewers to assess program effectiveness. Documentation of these reviews becomes essential evidence of the "reasonably designed, risk-based and effective" standard required by Bill C-2.

Leveraging technology partnerships for compliance success

As compliance requirements become more complex, many businesses are turning to specialized technology partners to manage their AML obligations. Modern financial platforms offer integrated compliance solutions that can scale with business growth while maintaining regulatory standards.

When evaluating compliance technology partners, businesses should consider factors such as regulatory expertise, global coverage, and integration capabilities. Partners with established track records in multiple jurisdictions can provide valuable insights into international best practices ¹¹.

The ability to consolidate compliance across multiple products and services also becomes valuable. Rather than managing separate compliance processes for different payment types or currencies, businesses can benefit from unified platforms that provide consistent controls and reporting across all activities.

Looking ahead: continuous evolution of AML requirements

The Strong Borders Act represents just one step in the ongoing evolution of AML regulation. As financial crime techniques evolve and new technologies emerge, regulatory requirements will continue to adapt. Businesses must build compliance programs flexible enough to accommodate future changes while meeting current requirements.

The global nature of financial crime means international cooperation will intensify. Canadian businesses should monitor developments in other jurisdictions, as successful enforcement approaches often spread across borders. The record $6 billion in global AML fines in the first half of 2025 signals that this trend toward stricter enforcement will continue ¹.

Investment in compliance infrastructure should be viewed not as a cost but as essential business infrastructure. Companies with robust compliance programs can pursue opportunities that others cannot, accessing new markets and partnerships with confidence. As regulatory scrutiny increases, strong compliance becomes a competitive advantage.

Conclusion: taking action now

The transformation of Canada's AML regime through Bill C-2 demands immediate action from businesses across all sectors. With penalties increasing by up to 40 times and new obligations extending to previously unregulated entities, the cost of non-compliance has never been higher. The upcoming FATF evaluation adds urgency to implementation efforts.

Successful navigation of these new requirements requires comprehensive risk assessment, robust technology infrastructure, and a culture of compliance throughout the organization. Businesses must move beyond checkbox compliance to demonstrate that their programs are genuinely effective at preventing money laundering and terrorist financing.

For companies operating internationally or managing complex payment flows, partnering with established financial services providers can provide the infrastructure and expertise needed to meet these enhanced requirements. As the regulatory landscape continues to evolve, having flexible, scalable compliance solutions becomes essential for sustainable growth. The time to act is now – waiting until Bill C-2 becomes law may leave insufficient time for proper implementation, exposing businesses to unprecedented regulatory risk.

FAQ

What are the key changes in Canada's Strong Borders Act (Bill C-2) for AML compliance?

Bill C-2, introduced on June 3, 2025, introduces unprecedented administrative monetary penalties up to C$20 million - a 40-fold increase from previous limits. The Act requires all reporting entities under the PCMLTFA to enroll with FINTRAC and renew their enrollment periodically. This represents the most significant overhaul of Canada's AML regime in response to growing global financial crime complexity.

How much have global AML fines increased in 2025?

Regulatory bodies worldwide issued over $6 billion in AML fines in just the first half of 2025 alone. Notable cases include OKX cryptocurrency exchange being fined over $500 million by the US Department of Justice for aiding over $5 billion in suspicious transactions due to inadequate KYC and AML frameworks. This dramatic increase demonstrates the escalating enforcement landscape globally.

What businesses need to register with FINTRAC under the new rules?

All reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) must now enroll with FINTRAC and maintain periodic renewals. This includes financial institutions, money service businesses, casinos, real estate brokers, and other entities handling financial transactions. The registration requirement is part of Canada's comprehensive AML regime overhaul.

When will the Financial Action Task Force (FATF) evaluate Canada's AML regime?

The FATF is scheduled to begin a mutual evaluation of Canada's AML regime in late 2025. This evaluation will assess the effectiveness of the new Strong Borders Act provisions and Canada's overall compliance with international AML standards. The timing coincides with the implementation of the new penalty framework and registration requirements.

How can businesses ensure safe international money transfers while maintaining AML compliance?

Businesses should partner with regulated financial platforms that maintain robust AML and KYC frameworks. For example, when sending money internationally to countries like Israel or Slovenia, using licensed financial services providers ensures compliance with both Canadian and international regulations. These platforms typically offer transparent fee structures, regulatory oversight, and built-in compliance monitoring to help businesses avoid the costly violations seen in recent enforcement actions.

What are the maximum penalties businesses can face under the new AML framework?

Under the Strong Borders Act's new administrative monetary penalty framework, businesses can face fines up to C$20 million - representing a 40-fold increase from previous penalty limits. This unprecedented penalty structure in the Canadian financial services sector reflects the government's commitment to strengthening AML enforcement. The severity of these penalties makes robust compliance infrastructure essential for all reporting entities.

Citations

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