We’re seeing FINTRAC ramp up Administrative Monetary Penalties against all sectors, however, for securities dealers we’re starting to see some heavy hits, something we haven’t seen before, signaling a graduated approach to compliance assessments by FINTRAC.
On July 3, 2025, FINTRAC announced an Administrative Monetary Penalty of $544,500 against an investment dealer headquartered in Vancouver, British Columbia. Additionally, on February 13, 2025, FINTRAC announced an Administrative Monetary Penalty of $66,000 against, a Wealth Management Securities Dealer in Ontario.
Securities dealers must fulfill specific obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations, to help combat money laundering and terrorist activity financing in Canada. As defined under the PCMLTFA, a securities dealer means a person or entity authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments or to provide portfolio management or investment advising services.
FINTRAC has the legislative authority to issue administrative monetary penalties (AMPs) to reporting entities that are found to be non-compliant with the PCMLTFA and associated Regulations. For more information, see Penalties for non-compliance.
Between the two notices, it was found that following compliance examinations, the following failures were found, which resulted in the AMPs:
- Failure to develop and apply written compliance policies and procedures that are kept up to date; and, in the case of an entity, are approved by a senior officer. Specifically, the firm did not sufficiently develop and document its compliance policies and procedures in relation to know your client and record keeping requirements.
- Failure to assess and document the risk of a money laundering or terrorist financing offence, taking into consideration prescribed factors. Specifically, the firm’s risk assessment was incomplete, as it did not clearly outline the risks associated with its clients and did not contain assessment of all the required categories. In addition, the risk assessment did not document an adequate methodology for the assessment of its money laundering and terrorist financing risks.
- Failure to institute and document the prescribed review of its policies and procedures, risk assessment and training program. Specifically, the scope of a review did not cover the firm’s risk assessment. Additionally, the review did not specify how the organization ensured that its compliance program was tested for effectiveness.
- Failure to submit suspicious transaction reports where there were reasonable grounds to suspect that transactions or attempted transactions were related to a money laundering or terrorist activity financing offence.
- Failure to take the prescribed special measures for high risk.
Of all the findings, the ones that netted the highest AMP were related specifically to:
- Failure to submit suspicious transaction reports where there were reasonable grounds to suspect that transactions or attempted transactions were related to a money laundering or terrorist activity financing offence.
- Failure to take the prescribed special measures for high risk.
Failures in suspicious transaction reporting continue to be a big focus for FINTRAC and a trend with the larger value AMPs that we’ve been seeing.
Securities dealers are responsible for the following requirements under the PCMLTFA and associated Regulations:
- Compliance program:
- Appoint a compliance officer who is responsible for implementing the program. The Compliance Officer must always have access to management and the authority to carry out their duties.
- Develop and apply written compliance policies and procedures that are kept up to date and, in the case of an entity, are approved by a senior officer. Policies and procedures must be detailed and reflect the reporting entities business model.
- Conduct a risk assessment of your business to assess and document the risk of a money laundering or terrorist activity financing offence occurring in the course of your activities. The categories that must be assessed are outlined in guidance.
- Develop and maintain a written, ongoing compliance training program for your employees, agents or mandataries, or other authorized persons.
- Institute and document a plan for the ongoing compliance training program and deliver the training (training plan).
- Institute and document a plan for a review of the compliance program for the purpose of testing its effectiveness, and carry out this review every two years at a minimum (two-year effectiveness review). The review must test all parts of your compliance program as well as operations.
- Know your client:
- verifying client identity,
- politically exposed persons, heads of international organizations, their family members and close associates, beneficial ownership, and
- third party determination.
- Transaction reporting:
- Record keeping;
- Foreign branches, foreign subsidiaries and affiliates; and
- Ministerial directives
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If you need help in creating or updating your compliance program and processes, are due for a Compliance Effectiveness Review, or have general questions on your compliance obligations, please get in touch.
