Editor’s Note
This article discusses Canada’s legislative response to international criticism over money laundering. The newly passed Bill C-12 aims to strengthen anti-money laundering enforcement, significantly increasing penalties for non-compliance across various sectors.
Internationally, Canada has faced criticism for being a haven for money laundering, and public concern has grown over companies’ lax handling of suspicious transactions. The House of Commons recently passed Bill C-12, which significantly strengthens anti-money laundering (AML) measures and is expected to take effect after Senate approval next year.
Once the new law is enacted, companies handling large transactions—from jewelers to major banks—will face potential fines up to 40 times higher than current standards.
This means, for example, if TD Bank Group were again fined for failing to report 20 suspicious transactions (as it was in 2024), it could face a penalty of $400 million instead of the $9.2 million it paid last year.
Canada is bolstering its AML regime, including substantially increasing penalties under existing rules. However, experts question whether higher fines alone can effectively address systemic vulnerabilities.
Shatiryan noted that the threat of massive fines might lead companies to submit more transactions for review, even if they don’t genuinely deem them suspicious.
Jeffrey Simser, former legal director at the Ontario Ministry of the Attorney General and author of a book on AML law, shares this concern.
He added that these measures should help empower compliance officers to convince businesses to invest in regulatory measures.
The Financial Transactions and Reports Analysis Centre of Canada (Fintrac) stated that it has the modernized systems and processes needed to fulfill its mandate, even if the volume of reported violations increases. CEO Sarah Paquet said the agency is also increasingly utilizing artificial intelligence (AI) to screen submitted reports.
Shatiryan suggested that the dramatic increase in potential fines could also lead to more litigation, as the fines would be substantial enough to justify legal challenges.
Fintrac has faced multiple lawsuits in the past. One case led to a 2016 Supreme Court ruling that forced the agency to suspend fines for several years to review its policies and increase transparency in how penalties are calculated. Fintrac’s comprehensive enforcement ramp-up may face further challenges.
In a speech in November 2023, Paquet stated the status quo was no longer acceptable. This was about a month after TD Bank announced a $3.1 billion settlement in the U.S. for AML violations.
Fintrac’s penalty amounts in recent years reflect this shift.
In the 2020-2021 fiscal year, Fintrac imposed fines totaling $538,000 for 9 violations. Over the next two years, fines amounted to $3.5 million and $1.1 million respectively. In 2023-24, fines exceeded $26 million for 12 violations. In 2024-25, a record 23 violation notices were issued, with total fines surpassing $25 million.
Violations have increased sharply this year, including a $177 million fine against Xeltox Enterprises Ltd. operating as Cryptmus and a $20 million fine against Peken Global Ltd. operating as KuCoin. Cryptmus has appealed its record penalty.
Fintrac has also fined several other companies this year, including Spence Diamonds Ltd., the Canadian National Exhibition Association, Canaccord Genuity Corp., and a range of casinos, credit unions, and real estate brokerages.
Jessica Davis, President and Principal Consultant at Insight Threat Intelligence, pointed out that the issue lies with the limited capacity of enforcement agencies. She doubts that even a tenfold increase in suspicious transaction reports submitted to Fintrac would lead to more enforcement actions.
She noted that the federal government’s commitment in the fall budget to advance the establishment of a financial crimes agency—a Liberal campaign promise from 2021—has been a long time coming.