Canada's New Anti-Money Laundering Legislation Significantly Raises Penalties

JD Supra Finance & Banking

Published March 26th, 2026

Detected April 1st, 2026

Summary

The Parliament of Canada has enacted Bill C-12, amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Maximum administrative monetary penalties have been increased 40-fold, with very serious violations now carrying penalties up to C$20-million per violation and cumulative caps reaching C$20-million or 3% of gross global revenue. A new enrollment requirement with FINTRAC has been introduced, with implementation pending Order in Council.

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What changed

Bill C-12 significantly expands Canada's AML enforcement framework by increasing maximum penalties 40x: minor violations up to C$40,000, serious up to C$4-million, and very serious up to C$20-million. The legislation creates a new very serious violation for failing to maintain a compliance program that is "reasonably designed, risk-based and effective," granting FINTRAC expanded discretion to evaluate program adequacy based on peer comparisons. Cumulative penalties are capped at the greater of C$20-million or 3% of gross global revenue at the group level, potentially exceeding C$1-billion for large reporting entities.

All reporting entities under the PCMLTFA must enroll with FINTRAC (effective date pending Order in Council) and maintain current enrollment information. Compliance programs must now demonstrate effectiveness beyond mere technical compliance with specific PCMLTFA requirements. Reporting entities should immediately audit compliance programs against the new effectiveness standard and prepare for FINTRAC enrollment. Given the unprecedented penalty levels and expanded enforcement discretion, entities should anticipate increased FINTRAC enforcement activity and consider legal challenges to enforcement actions.

What to do next

Audit compliance programs to ensure they are reasonably designed, risk-based and effective under the new statutory standard
Prepare for mandatory FINTRAC enrollment requirement pending Order in Council
Review penalty exposure under new C$20-million per violation and cumulative cap structures

Penalties

Up to C$40,000 (minor), C$4-million (serious), or C$20-million (very serious) per violation; cumulative cap of greater of C$20-million or 3% of gross global revenue at group level

Source document (simplified)

April 1, 2026

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

LinkedIn Facebook X Send Embed 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.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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