Canada’s financial crime agency, FINTRAC, is preparing to significantly raise penalty limits for non-compliance with anti-money laundering laws, a move aimed at strengthening enforcement across banks, real estate firms, casinos, and fintech platforms. Industry leaders welcome stricter deterrence but warn of increased compliance burdens and uneven impact across sectors.
Canada Overhauls Its Financial Penalty Regime
Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) is preparing a sweeping reform that will dramatically raise the size of fines it can impose on businesses that violate the country’s anti-money laundering (AML) and counter-terrorist financing (CTF) obligations.
As reported by Josh Rubin of the Toronto Star, the changes come after years of criticism that penalties levied by FINTRAC were too mild to deter major financial institutions. Under the new framework introduced by the federal government, administrative monetary penalties (AMPs) for non-compliance will sharply increase in 2026, aligning Canada’s sanctions regime with those in other G7 countries.
According to FINTRAC’s official statement released in December 2025, the proposed maximum penalties for serious violations could rise from CAD 500,000 per infraction to several million dollars, depending on the circumstances and size of the institution.
Ottawa Seeks Stronger Deterrence
A spokesperson for the Department of Finance, quoted in Bloomberg News, said the measure is part of wider efforts to “enhance Canada’s effectiveness in combatting illicit financial flows” following international criticism from the Financial Action Task Force (FATF) in its mutual evaluation.
“Canada must ensure its AML enforcement tools are proportionate, dissuasive, and effective,”
the spokesperson stated.
“Increasing FINTRAC’s administrative penalty authority forms a key part of that strategy.”
As reported by Amanda Stephenson of The Canadian Press, Canada’s new approach aims to close historical enforcement gaps where large financial institutions, even when cited for compliance failures, faced comparatively minor penalties that did little to change behaviour.
Growing Scrutiny Over AML Effectiveness
Canada’s AML system, often considered robust in design, has repeatedly faced scrutiny for weak enforcement. According to a 2023 FATF assessment, Canada achieved strong compliance on technical rules but lagged in demonstrating “tangible enforcement outcomes.”
The FATF report noted that between 2014 and 2023, FINTRAC imposed only 21 monetary penalties, amounting to less than CAD 1 million yearly, a small figure compared to the billions in suspicious transaction value it monitors.
As reported by Globe and Mail journalist Mark Rendell, the watchdog’s previous penalty regime often favoured negotiated settlements or warnings instead of large fines. In one widely cited case, a major Canadian bank faced an AMP of just CAD 275,000 for systemic reporting lapses spanning multiple years—an amount many industry experts deemed “insufficient to incentivise institutional change.”
Lessons from Past Enforcement Gaps
Former FINTRAC Deputy Director Denis Meunier, quoted by CBC News, said the lack of deterrent fines has long undermined the credibility of financial oversight:
“If penalties cost less than the compliance effort, non-compliance becomes a business decision.”
He noted that other jurisdictions like the United Kingdom’s Financial Conduct Authority (FCA) and the U.S. Financial Crimes Enforcement Network (FinCEN) regularly fine banks hundreds of millions of dollars for similar offences.
According to a Reuters analysis published in November 2025, FINTRAC’s expanded sanctioning powers will allow it to impose tiered penalties based on the institution’s size, intent, and degree of negligence. The new categories—minor, moderate, and serious—mirror international best practices in regulatory enforcement.
Industry Braces for Higher Compliance Costs
As news of the reforms spread, Canadian banks and reporting entities began assessing the implications of the higher penalty ceiling. The Canadian Bankers Association (CBA), in a statement carried by BNN Bloomberg, said it supports strong enforcement but called for “fairness, consistency, and transparency” in penalty calculations.
“Financial institutions are deeply committed to safeguarding Canada’s financial system,”
the CBA said.
“However, clarity in expectations and proportionality in enforcement will be critical as new penalty limits take effect.”
Sarah Paquet, FINTRAC’s Director and Chief Executive Officer, quoted by Financial Post, said the revisions are designed not just to penalise non-compliance but to
“encourage robust internal controls, cultural accountability, and timely reporting of suspicious transactions.”
“The intent is to foster trust and integrity across Canada’s financial ecosystem,”
Paquet said, adding that FINTRAC will continue providing guidance and outreach to help reporting entities adjust to the new regime.
Real Estate and Casinos Face Greater Oversight
The new rules will not only target banks. FINTRAC’s oversight extends to more than 24,000 businesses, including real estate brokers, money services companies, dealers in precious metals and stones, and casinos.
As reported by CTV News journalist Glen McGregor, these sectors have often been identified as “high-risk conduits” for money laundering, particularly in British Columbia’s real estate and gambling markets.
In 2022, the Cullen Commission of Inquiry into Money Laundering in British Columbia found that cash-based sectors had been exploited by criminal networks due to lax supervision and ineffective deterrence. The commission specifically recommended stronger penalties and greater transparency in enforcement, both of which underpin FINTRAC’s current reforms.
Alignment with International Standards
Canada’s move brings it closer to global counterparts in AML enforcement. The United Kingdom’s FCA imposes penalties exceeding £100 million in some cases, while U.S. agencies such as the Office of the Comptroller of the Currency (OCC) and FinCEN have applied fines surpassing US$600 million against major financial institutions.
According to policy experts cited in the National Post, aligning Canada’s penalty framework with these jurisdictions enhances both deterrence and regulatory credibility internationally, particularly as cross-border financial crimes grow in complexity.
Professor Christian Leuprecht of the Royal Military College of Canada, quoted in the Toronto Star, noted that greater financial penalties also reinforce Canada’s diplomatic commitment to combating kleptocracy, sanctions evasion, and illicit financial flows linked to global corruption networks.
Legal and Operational Considerations
Legal experts caution that while increased fines strengthen accountability, they must be applied with procedural fairness. According to lawyer Nadine Payne of Dentons Canada, interviewed by Global News, regulatory overreach without transparent adjudication mechanisms could lead to challenges before the Federal Court of Canada.
“Institutions must have access to proper appeal channels, and penalties must be proportionate to the actual risk and intent,”
Payne said.
FINTRAC clarified in its December 2025 update that the revised framework will maintain existing appeal processes through the Director’s delegated authority and judicial review mechanisms, ensuring regulatory balance.
Expert Reactions to the Reform
According to John Boscariol, partner at McCarthy Tétrault LLP and a specialist in sanctions and trade law, quoted in The Globe and Mail, the move represents a “maturing phase” in Canada’s AML enforcement.
“For years, Canada relied more on cooperation than confrontation,”
he said.
“This signals a shift towards credible enforcement, especially as global partners demand more demonstrable results.”
Meanwhile, financial crimes researcher Peter German, also cited by CBC News, emphasised that higher fines alone are not enough:
“FINTRAC needs stronger investigative capacity, real-time data analytics, and public transparency on where its enforcement resources go.”
Anticipated Impact on the Financial Landscape
Analysts expect the tougher fine regime to influence compliance budgets and internal governance structures across Canada’s financial ecosystem. Mid-sized reporting entities, particularly in real estate and money services, are expected to experience the sharpest pressure due to limited resources compared to major banks.
According to a November 2025 report by Deloitte Canada, AML compliance costs have already risen by 28 percent year-over-year among Canadian reporting entities. The firm anticipates another surge through 2026 as firms recalibrate risk systems and enhance documentation standards to avoid hefty penalties.
FINTRAC’s public consultation on the proposed penalty rules is due to close in early February 2026, after which final legislative amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations will be tabled in Parliament.
Broader Message on Financial Integrity
In her concluding remarks at a recent Parliamentary committee session, FINTRAC head Sarah Paquet underscored that
“enforcement is only one pillar of trust; collaboration across government, regulators, and the private sector is equally essential.”
As cited by CBC Parliamentary Bureau reporter Catherine Cullen, Paquet added that FINTRAC’s goal
“is not to punish but to protect Canadians’ confidence in the integrity of their financial system.”
Financial experts, however, emphasise that true deterrence will depend on the agency’s willingness to apply penalties consistently and publicly disclose enforcement actions—steps which, according to Transparency International Canada, remain limited but crucial for accountability.