Dramatic increase in Fintrac fines coming, but their effectiveness is less clear

The cost of doing business is set to go up, dramatically, for companies that don’t keep a close eye on anti-money laundering obligations. 

A broad range of firms that handle large transactions, from jewellers to big banks, face potential penalties 40 times higher than existing rates. The changes are part of Bill C-12, which passed in the House of Commons on Dec. 11 and is waiting for a final stamp of approval from the Senate. 

“That legislation, if enacted, will significantly transform the enforcement framework,” said Vladimir Shatiryan, a partner at Blakes who focuses on financial regulations.

The changes would mean that, for example, if TD Bank Group were to again be fined for failing to report 20 suspicious transactions, as it was in 2024, it could face $400 million in penalties rather than the $9.2 million it paid last year.

The notable increase comes as part of wider efforts in Canada to step up anti-money laundering measures, including a significant ramp up in penalties using existing rules, but experts are skeptical the higher fines themselves will do much to fix the gaps in the system.

The size of the potential penalties mean that firms will likely submit many more transactions for review, even ones they don’t necessarily think are suspicious, said Shatiryan. 

“Someone told me 'Smile and file,' rather than, you know, be more judicious and deliberate in identifying suspicious transactions when reporting,” he said.

“Because overreporting doesn't result in penalties, but under-reporting certainly does.”

It’s a concern shared by Jeffrey Simser, a former legal director with Ontario's Ministry of the Attorney General who wrote a book about anti-money laundering laws.

“There's going to be more noise and less signal in the system as a direct consequence of what they're doing.”

The measures, however, should help empower compliance staff to convince companies to spend on oversight, said Simser. 

“The good part of the fines is you can then say to your boss, yeah, I know it costs money, but guess what? If we don't do this, we're going to get a fine.”

Fintrac said in a statement that it has the modern systems and processes needed to fulfil its mandate, even with higher submissions, while chief executive Sarah Paquet has said the agency is also leaning more into artificial intelligence to sift through submissions. 

The significant increase in potential penalties will also likely lead to many more court challenges, said Shatiryan, as the fines would justify the costs of litigation.

Fintrac has seen numerous court challenges in the past, including one that led to a 2016 Supreme Court ruling that forced the agency to halt penalties for years as it reviewed its policies and made more transparent how it calculates penalties. 

More challenges are also likely as Fintrac ramps up enforcement more generally. 

Paquet said in a November 2023 speech, about a month after TD announced a US$3.1 billion settlement in the U.S. over anti-money laundering failures, that the status quo was no longer acceptable.

“We are actively stepping up our enforcement action,” said Paquet, who was not available for an interview.

“We will confront those businesses that are not meeting their moral and social responsibilities.”

The change can be seen in Fintrac penalties in recent years. 

The 2020-21 financial year saw $538,000 in penalties across nine charges, then $3.5 million and $1.1 million in the next two years. The 2023-24 year jumped to more than $26 million in fines on 12 violations, and last year had 23 notices of violation (the most ever) as well as more than $25 million in fines.

This year has seen a further dramatic escalation, including a $177 million fine against Xeltox Enterprises Ltd., operating as Cryptomus, and a $20 million fine against Peken Global Ltd., operating as KuCoin. Cryptmous has appealed its record fine.

Fintrac has also levelled fines on numerous other firms this year including Spence Diamonds Ltd., the Canadian National Exhibition Association, Canaccord Genuity Corp. and a range of casinos, credit unions and real estate brokers.

The actions come as more firms become subject to Fintrac rules, and as the G7-backed Financial Action Task Force conducted a high-profile review of Canada's anti-money laundering controls this year. 

Fintrac's step up in fines have definitely made companies take the rules more seriously, said Jessica Davis, president and principal consultant at Insight Threat Intelligence. 

But she said the problem is that law enforcement agencies don’t have the capacity to deal with more submissions, so even if Fintrac submitted 10 times more suspicious transactions she doubts it would result in more enforcement action.

“We just don't really have much in the way of a financial crimes enforcement capacity in Canada,” said Davis.

The federal government promised in its fall budget to move ahead with a financial crimes agency, but it was also a Liberal campaign promise in 2021, so she's waiting to see what actually happens.

Simser said that even if the initiative gets going soon, it takes years to properly train investigators to sift through complex financial filings, and none of it is cheap.

“The biggest challenge, I think, is implementing and building the infrastructure to actually enforce the law,” said Simser.

“It’s going to take some time and it's going to be hard work and it's going to call for resources, and there's never enough resources.”

 This report by The Canadian Press was first published Dec. 21, 2025.