FINTRAC Fines and Compliance Trends: A Comprehensive Report

Canada's Financial Transactions and Reports Analysis Centre (FINTRAC) has been increasingly active in enforcing anti-money laundering (AML) regulations across various financial sectors. This report examines recent enforcement actions, penalty trends, and regulatory developments that financial institutions should be aware of.

Recent Enforcement Actions

FINTRAC has demonstrated a consistent pattern of enforcement against non-compliant financial institutions throughout 2024 and early 2025. Notable recent penalties include:

• Exchange Bank of Canada: In December 2024, FINTRAC imposed a $2,457,750 penalty on this Toronto-based bank primarily dealing in foreign exchange. The violations included failure to submit suspicious transaction reports, inadequate monitoring of business relationships, and failure to report large cash transactions.
• Simple Canadian Services: In November 2024, this money services business in Surrey, British Columbia received a $229,350 penalty for non-compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
• MSBG International Holdings Ltd.: In February 2025, this Vancouver-based money services business was fined $24,750 for failing to develop and maintain up-to-date written compliance policies and procedures.
• Cash Shop #27: A Mississauga-based money services business received a $33,000 penalty in February 2025 for failing to provide requested compliance documentation during an examination.

Penalty Structure and Trends

FINTRAC classifies violations based on their severity and harm level, with corresponding penalties:

• Highest Harm: Violations that significantly undermine AML objectives carry penalties of up to $100,000.
• High Harm: Serious but less severe violations typically result in penalties around $75,000.
• Moderate Harm: Less critical compliance failures may incur penalties of approximately $50,000.

For individuals, current penalties can range from $1 to $100,000 per violation, while entities may face penalties from $1 to $500,000 per violation.

Significant Regulatory Changes

The Canadian government has proposed substantial increases to FINTRAC's penalty structure:

• For Entities: Maximum penalties would increase to $20 million or three percent of annual worldwide gross revenue (whichever is greater) per violation notice - a forty-fold increase from current levels.
• For Individuals: Proposed maximum penalties would reach $4 million or three percent of annual worldwide gross revenue per violation.
• Criminal Penalties: The government has proposed increasing fines for criminal offenses by ten times the current amount.

Compliance Focus Areas

FINTRAC examinations have consistently identified several key areas where financial institutions fail to meet compliance requirements:

• Suspicious Transaction Reporting: Failure to submit reports when there are reasonable grounds to suspect money laundering or terrorist financing activities.
• Compliance Program Documentation: Inadequate written policies and procedures that aren't kept current.
• Ongoing Monitoring: Insufficient monitoring of business relationships to detect suspicious patterns.
• Transaction Reporting: Failure to report large cash transactions exceeding $10,000.

Broader Implications

The increased enforcement activity comes amid growing international scrutiny:

• Canada is preparing for an upcoming evaluation by the Financial Action Task Force (FATF) in 2025-2026.
• Canadian financial institutions have faced significant penalties both domestically and internationally, including TD Bank's $9.2 million FINTRAC fine and over US$3 billion in penalties from U.S. authorities.
• The government has proposed requiring all reporting entities, including banks, to register with FINTRAC, expanding the agency's supervisory reach.

Conclusion

FINTRAC has imposed more than 140 penalties across most business sectors since receiving legislative authority to do so in 2008. In the 2023-2024 fiscal year alone, the agency issued 12 Notices of Violation totaling over $26 million.

Financial institutions operating in Canada should prioritize robust compliance programs, particularly focusing on suspicious transaction reporting, which FINTRAC identifies as "critical to FINTRAC's ability to generate actionable financial intelligence". With proposed penalty increases and enhanced regulatory powers on the horizon, the cost of non-compliance is set to rise dramatically in the coming years.