The changes made to combat financial crime in the 2024 Fall Economic Statement (FES 2024) complement a series of Government of Canada initiatives to strengthen the legal framework introduced since 2015. The most recent of these initiatives is a current consultation announced on November 30, 2024 on draft amendments to the regulations to Canada's primary anti-money laundering/anti-terrorist financing legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the PCMLTFA). The measures subject to this consultation are described in our article Ottawa proposes new measures to fortify Canada's frontlines against money laundering and terrorist financing. In addition, many changes have been recently announced or implemented that strengthen Canada's AML/ATF regulator, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

Canada is set to begin its next mutual evaluation by the Financial Action task Force (the FATF) in 2025-26. Canada is a founding member and current Vice-President of the FATF. Canada's last mutual evaluation occurred in 2016. Currently, FATF reports that Canada's compliance with FATF Recommendations is as follows:

  • Compliant with 11 Recommendations
  • Largely compliant with 23 Recommendations
  • Partially compliant with 5 Recommendations
  • Non-compliant with 1 Recommendation
The risk environment for financial crime is constantly evolving, which poses challenges for regulated and unregulated market participants alike. FES 2024 notes that money laundering often enables other crimes such as human trafficking, fentanyl trafficking, and other illicit drug trafficking, as well as fraud, theft, and other economic crimes. The current geopolitical climate introduces other risks to Canada's economic sector and both state and non-state actors may pose threats to Canada's financial integrity.

A stronger framework to fight financial crimes

  • Legislative and regulatory changes: FES 2024 announces the government's intention to make changes to:
    • Expand the AML/ATF framework to capture company service providers that can introduce ML/TF risks;
    • Require reporting entities that are not already registered with FINTRAC to register;
    • Allow FINTRAC to share information with the Office of the Commissioner of Canada Elections to detect and deter illicit financing and foreign interference in Canadian elections;
    • Clearly prohibit the opening of anonymous accounts;
    • Clarify the powers granted to the Canada Border Service Agency in connection with the 2023 Fall Economic Statement to combat trade-based financial crime; and
    • Advance the effective date of FINTRAC disclosures to provincial civil forfeiture offices.
  • New Taskforce: FES 2024 announces the creation of a new taskforce for law enforcement and the financial sector to exchange and analyze information on high-end money laundering schemes, including those related to fentanyl trafficking. This taskforce will be modeled after the United Kingdom's Joint Money Laundering Intelligence Taskforce and tailored to fit Canada's legal context.
  • Interdepartmental cooperation: The government plans to initiate interdepartmental discussions with non-profit organizations. These dialogues aim to increase awareness, improve communication, and more effectively address the risks of money laundering, terrorist financing, and sanctions evasion.

Steeper penalties on the horizon

FES 2024 signals the government's plan to introduce changes that would increase administrative monetary penalty (AMPs) amounts, apply penalties proportionately to small businesses, and raise fines to more forcefully prosecute egregious cases of criminal non-compliance. Proposed changes to the PCMLTFA and its regulations are detailed below:

  • Administrative monetary penalties (AMPs):
    • All individual AMP amounts would be increased by 40 times the current amount.
    • FINTRAC would be required to provide accurate financial information to assess a reporting entity's ability to pay when issuing an AMP.
    • There would be a new aggregate penalty limit for all AMPs issued in a single Notice of Violation, specifically the greater of:
      • $4 million for an individual and $20 million for an entity; and
      • 3 per cent of annual worldwide gross revenue.
    • Money services businesses with outstanding AMP would be subject to refusal or revocation of their FINTRAC registrations.
    • Following the issuance of an AMP, the reporting entity and FINTRAC would be subject to a new requirement to enter into a compliance agreement requiring the reporting entity to undertake specific actions to address the deficiencies that led to the AMP. If the compliance order is not adhered to, the FINTRAC Director would be required to issue a public compliance order with a corresponding AMP of an amount up to the greater of:
      • $5 million for an individual and $30 million for an entity; and
      • 3 per cent of annual worldwide gross revenue.
  • Criminal offences:
    • Fines for all criminal offences would be increased by 10 times the current amount and courts would be provided with additional guidance to increase undefined prison terms to up to one year.
    • A new criminal offence would be introduced for reporting entities providing false, misleading, or incomplete information to FINTRAC (this would not apply to passing on "unsuspicious information" provided by a client).
  • Compliance programs:
    • A new overarching requirement would be created for reporting entities to establish and maintain an effective, risk-based, and reasonably designed AML/ATF compliance program.
    • Violations of existing compliance program requirements would be re-classified as "very serious" and thus subject to greater penalties.
  • Regulatory cooperation: The PCMLTFA and the Office of the Superintendent of Financial Institutions Act would each be amended to make FINTRAC a member of the Financial Institutions Supervisory Committee (FISC), enabling better coordination across agencies in fighting financial crimes. FISC members are permitted to share information on matters relating to the supervision of federally regulated financial institutions. FINTRAC would join current FISC members the Office of the Superintendent of Financial Institutions, the Bank of Canada, the Department of Finance Canada, the Canada Deposit Insurance Corporation and the Financial Consumer Agency of Canada.

For any questions you may have about this topic, please contact the authors or a member of our Financial Services & Technology (FSxT) or White Collar Defence & Investigations groups.