Canada’s New Anti-Money Laundering Legislation Significantly Raises Penalties and Adds New Violations

On March 26, 2026, Bill C-12, the Strengthening Canada’s Immigration System and Borders Act, received royal assent. The Bill significantly amends Canada’s anti-money laundering (AML) legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and introduces an unprecedented administrative monetary penalty (AMP) framework. With significantly higher penalties, broadened regulatory discretion and a more assertive Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), financial institutions and other reporting entities under the PCMLTFA continue to face increasing pressure to design, implement and defend effective AML compliance programs. We expect the Bill’s amendments will prompt greater willingness among reporting entities to challenge FINTRAC’s enforcement actions, inviting greater judicial scrutiny of enforcement of the PCMLTFA.

Significantly Increased Penalties

The maximum AMPs that may be issued under the PCMLTFA have been increased by 40 times their previous amounts, subject to transitional provisions set out in Bill C-12. Minor, serious and very serious violations will carry maximum penalties of C$40,000, C$4-million and C$20-million, respectively. The “very serious” violation category is also expanded to include all compliance program-related requirements, such as the requirement to apply compliance policies and procedures, conduct risk assessment and implement effectiveness testing.

Effective March 26, 2026, the PCMLTFA now includes a new very serious violation for a failure to ensure a compliance program is “reasonably designed, risk-based and effective.” This new requirement effectively gives FINTRAC greater discretion to be more prescriptive in its expectations for what constitutes an effective compliance program, even where a program may otherwise comply with the more specific requirements under the PCMLTFA. FINTRAC may also rely on this provision to question the effectiveness of the compliance program of an entity that files fewer suspicious transactions or other reports compared with its peers.

Cumulative Cap

Cumulative penalties for multiple violations are capped at the greater of C$20-million or 3% of a reporting entity’s gross global revenue, to be calculated at the group level where a reporting entity has affiliates. For some very large Canadian reporting entities, the 3% cap could exceed C$1-billion, based on reported gross revenues.

Ability to Pay

A reporting entity’s ability to pay is now a factor FINTRAC must consider when determining the amount of an AMP, alongside existing criteria, such as the harm caused by the violation and the principle that penalties should promote compliance rather than be punitive.

Enrolment Requirement

The amendments also require that all reporting entities under the PCMLTFA must apply for and maintain enrolment with FINTRAC, similar to the registration regime currently applicable to money services businesses (MSBs). This enrolment requirement is not yet in effect, and will come into force on a date fixed by Order in Council. Reporting entities will be required to keep enrolment information up to date and periodically renew their enrolment. Similar to FINTRAC’s online register of MSBs, FINTRAC will maintain a public roll of enrolled reporting entities.

For more information, please contact the authors or any other member of our Financial Services Regulatory group.