Proposed money laundering financial penalties could bankrupt offenders

The Canadian federal government’s 2024 Fall Economic Statement (the “Economic Statement”) released this week included a series of proposals aimed at combatting money laundering in Canada. Most significantly, the Economic Statement proposed to increase financial penalties under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”) by as much as 40 times their current levels.

Proposed increase in financial penalties

The Economic Statement proposes to increase administrative monetary penalties (“AMPs”) significantly. Entities could face penalties of up to $20 million or three percent of their annual worldwide gross revenue, whichever is greater, for a single notice of violation issued by FINTRAC. For individuals, the proposed maximum penalty would be the greater of $4 million or three percent of their annual worldwide gross revenue. Currently, for example, the maximum penalty under the PCMLTFA for failing to report a suspicious transaction is $500,000.

The proposed changes to the AMP maximums are not the only financial penalties that the federal government is proposing to increase in the Economic Statement. In addition, the Economic Statement proposes to increase fines for all criminal offences by ten times the current amount and to provide additional guidance to courts by increasing undefined prison terms to up to one year.

Related proposals

In addition to increased financial penalties, the Economic Statement has proposed other consequential changes. For example, the Economic Statement proposes to require all reporting entities to register with FINTRAC. Currently, only entities known as money services businesses, and certain other entities, are required to register with FINTRAC. Notably, this amendment would require banks to register with FINTRAC.

Moreover, the Economic Statement proposes to allow FINTRAC to share information with election oversight officials to address foreign interference in Canadian elections and close an information-sharing gap by adding FINTRAC to the Financial Institutions Supervisory Committee.

Conclusion

It is not clear when the proposals contained in the Economic Statement will be tabled. As it stands, the federal government would need to introduce legislation to amend the PCMLTFA, meaning the final amendments could differ significantly from the current proposal. If you are concerned that your business may be impacted, contact a member of our Financial Services or Compliance team for assistance.