In a recent enforcement action, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced that Primary Capital Inc., a Toronto-based exempt market dealer, has been fined $93,390 for multiple anti-money laundering (AML) compliance deficiencies as part of increasing regulatory scrutiny on financial entities in Canada.
This penalty reflects FINTRAC’s ongoing efforts to uphold Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the associated regulations designed to safeguard the integrity of Canada’s financial system from illicit activities. The administrative monetary penalty was imposed on May 15, 2025, following a comprehensive compliance review, and has already been paid in full, concluding the proceedings.
Details of the Compliance Failures
The compliance examination by FINTRAC uncovered several critical failures at Primary Capital Inc. These failures included the absence of adequately developed and applied written compliance policies and procedures that are regularly updated and formally approved by senior management. Such policies are fundamental as they provide the framework by which financial institutions identify, assess, manage, and mitigate risks related to money laundering and terrorist financing.
Primary Capital Inc. also failed to properly assess and document the risks associated with potential money laundering or terrorist financing activities. This risk assessment deficiency extended to ignoring prescribed factors that must be considered by an entity to understand its exposure and vulnerability effectively.
Additionally, the firm neglected to institute the required, documented periodic review of its compliance policies and procedures, risk assessments, and training programs. Regular reviews are critical to ensuring that compliance measures remain effective in the face of evolving threats and regulatory expectations.
One of the more serious lapses was Primary Capital Inc.’s failure to take reasonable measures within mandated timeframes to determine the status of clients who might be politically exposed persons (PEPs) or related figures, including heads of international organizations, family members, or close associates of PEPs. Given the heightened risk of corruption and misuse of funds associated with such individuals, this aspect of client due diligence is crucial for preventing the use of financial services for illicit purposes.
Regulatory Context and Broader Compliance Environment
This enforcement action is one among several recent FINTRAC penalties reflecting a pattern of increased regulatory vigilance in Canada. The Canadian government has committed to strengthening its AML regime, partly in preparation for the Financial Action Task Force’s (FATF) upcoming Mutual Evaluation scheduled for late 2025 and early 2026. The FATF evaluation assesses how well countries comply with international standards designed to detect and deter money laundering and terrorist financing.
The government recently signaled intentions to significantly raise financial penalties for AML breaches, with proposed fines reaching up to $30 million for entities and $5 million for individuals, and potentially linked to 3 percent of a reporting entity’s worldwide gross revenue. These dramatically increased penalties underscore the priority placed on compliance.
Other Recent FINTRAC Enforcement Actions
The Primary Capital Inc. case follows several notable FINTRAC enforcement actions this year. For example, SIGA, a firm penalized on August 28, 2025, faced a $1,175,000 administrative monetary penalty for non-compliance with AML requirements. Similarly, Canaccord Genuity Corp., a well-known investment dealer, was fined $544,500 after FINTRAC found failure to report suspicious transactions and gaps in due diligence on high-risk clients, including overlooking red flags such as clients with multiple foreign bank accounts and misleading client information.
Moreover, Canadian National Exhibition Casino in Toronto was recently fined $199,000 for failing to properly assess and document money laundering or terrorist financing risks and for lacking documented compliance reviews.
These enforcement actions collectively illustrate FINTRAC’s commitment to holding firms accountable and encouraging better AML compliance across various sectors of the Canadian financial industry.
Statements from FINTRAC
FINTRAC maintains that its role is both supportive and enforcement-driven. In related press releases, statements emphasized the importance of compliance to protect Canadians and Canada’s economic security.
A spokesperson said, “Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime is in place to protect the safety of Canadians and the security of Canada’s economy. FINTRAC works with businesses to help them understand and comply with their obligations under the Act. We are also firm in ensuring that businesses continue to do their part, and we will take appropriate actions when they are needed.”
Importance of Compliance for Market Dealers
Market dealers operating in Canada are required to develop, maintain, and regularly update robust AML compliance programs. These programs must include detailed client identification and verification processes, ongoing risk assessments considering prescribed factors such as client type and geographical exposure, and mandatory training for staff.
Failure to meet these obligations leaves firms vulnerable to facilitating illicit financial flows, including money laundering, terrorist financing, and sanctions evasion, all of which carry severe legal and reputational risks.
FINTRAC’s enforcement in this case serves as a cautionary tale for other market dealers and financial institutions, highlighting the need for diligent compliance and vigilance in AML obligations.
The administrative monetary penalty imposed on Primary Capital Inc. underlines Canada’s stringent approach to combating financial crime and enhancing AML compliance. With regulatory expectations rising sharply and penalties set to become more severe, firms in the financial sector must prioritize compliance to navigate the evolving regulatory landscape safely.
AML Editor’s article was originally published in mlex on Sep, 18 2025