Anti-Money Laundering and FINTRAC Obligations: complete guide for advisors 2026

The legislative framework: PCMLTFA and FINTRAC

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) is the federal Canadian law that establishes the anti-money laundering regime. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is the federal agency responsible for receiving, analyzing and disclosing financial transaction reports. FINTRAC does not conduct investigations: it transmits information to law enforcement agencies (RCMP, CSIS, provincial police) when thresholds are met.

Financial security advisors and mutual fund representatives are reporting entities under the PCMLTFA. This means they are legally required to comply with a set of specific obligations regarding client identification, record keeping, transaction reporting and training. Non-compliance constitutes a criminal offence.

Client identification and identity verification

Client identification is the advisor's first obligation. It must be performed before any transaction. The advisor must verify the client's identity by obtaining a valid government-issued photo identification (driver's licence, passport, health card with photo). The information to verify includes the full name, date of birth and address. For legal entities, the advisor must verify the existence of the corporation, its registered office and the identity of directors and beneficial owners.

Verification can be done in person (primary method) or electronically through an approved identity verification service. The advisor must keep a copy of the identification document or record the relevant information (number, date of issue, issuing authority). Verification must be updated periodically, particularly if the client's profile changes significantly.

Reporting threshold: cash transactions of $10,000 or more

Any cash transaction of $10,000 or more must be the subject of a mandatory report to FINTRAC. This report must be made within 15 calendar days following the transaction. The $10,000 threshold applies to a single transaction or to multiple cash transactions made within a 24-hour period by or on behalf of the same client, if the total reaches $10,000 or more.

The definition of cash includes Canadian and foreign banknotes and coins. Cheques, electronic transfers and money orders are not considered cash for this obligation. However, international electronic fund transfers of $10,000 or more are subject to a separate reporting obligation.

It is important to note that structuring — that is, the deliberate splitting of a transaction into amounts below $10,000 to avoid reporting — is itself an offence. If the advisor suspects that the client is structuring their transactions, they must file a suspicious transaction report.

Suspicious transactions: no threshold, immediate reporting

The suspicious transaction report (STR) is the most important obligation of the anti-money laundering regime. Unlike the cash transaction report, there is NO threshold: if the advisor has reasonable grounds to suspect that a transaction is related to money laundering or terrorist financing, they must report it immediately to FINTRAC, even if the amount is $100.

Indicators of suspicious transactions include: the client refuses to provide identification or provides suspicious documents, transactions do not match the client's known financial profile, frequent cash deposits just below the $10,000 threshold (structuring), the client is evasive about the source of funds or the reason for the transaction, transactions involving high-risk countries identified by the FATF, and unusual requests for speed or confidentiality in transactions.

The report must be filed within 30 days of the time the advisor formed the suspicion. The advisor does not need to be certain that the transaction is related to money laundering: reasonable grounds for suspicion are sufficient. When in doubt, it is better to report.

Politically Exposed Persons (PEP)

A Politically Exposed Person is someone who holds or has held a prominent public position. This includes heads of state, ministers, members of parliament, superior court judges, generals, ambassadors, heads of state-owned corporations, and senior officials. The definition extends to the PEP's family members (spouse, children, parents, siblings) and close associates (business partners, advisors).

For PEPs, the advisor must perform enhanced due diligence. This includes obtaining senior management approval to establish or maintain the business relationship, determining the source of funds and wealth, ongoing enhanced monitoring of transactions, and regular updating of client information. The advisor must check with each new client whether they are or have been a PEP, a family member of a PEP, or a close associate of a PEP.

Disclosure prohibition (tipping off)

One of the strictest rules of the anti-money laundering regime is the absolute prohibition on disclosure. The advisor must NEVER inform the client, or any other person, that a suspicious transaction report has been filed or is being considered. This prohibition also applies to colleagues, management and any other unauthorized person.

Tipping off is a criminal offence under section 55 of the PCMLTFA. Penalties are severe: fines of up to $2,000,000 and imprisonment of up to 5 years. Even an indirect hint or behavior that could alert the client constitutes a violation. The advisor must maintain normal behavior with the client after filing a report.

Record keeping and retention

The advisor must retain all documents related to client identification, identity verification, reported transactions and due diligence for at least 5 years after the end of the business relationship. Records must be readily accessible for potential review by FINTRAC or the regulatory body (AMF, CIRO).

Training and compliance program

Each reporting entity must implement a compliance program that includes appointing a compliance officer, written policies and procedures, initial and ongoing training for all employees, and a periodic review by an external auditor (every two years). Training must cover reporting obligations, suspicious transaction indicators, internal procedures and penalties for non-compliance. The advisor must document their training and keep certificates.

Penalties and consequences

Penalties for non-compliance are severe and include administrative penalties (fines from $1,000 to $500,000 per violation), criminal penalties (fines from $500,000 to $2,000,000 and imprisonment from 6 months to 5 years for the most serious offences), suspension or revocation of the practice licence by the AMF or CIRO, and irreparable damage to professional reputation. FINTRAC has the power to conduct inspections without notice and impose administrative penalties without going through the courts.

Frequently asked questions