FINTRAC Requirements

FINTRAC’s regulatory requirements are detailed and wide-ranging. Key reporting obligations and mandates include:

• Transaction reporting: Businesses must file large cash transaction records, electronic funds transfer reports, and suspicious transaction reports (STRs) when there are reasonable grounds to suspect illicit activity.
• Record keeping obligations: Maintain records of client identification information, business relationships, third party determination, beneficial ownership, and large or suspicious operations for prescribed retention periods.
• Risk-based approach: Conduct a risk assessment (proportional to the business’s size) factoring other relevant factors such as delivery channels, client profiles, geography, or virtual currency exposure.
• Compliance officer appointment: Designate a compliance officer responsible for oversight of the compliance program, ensuring ongoing monitoring, training, and effectiveness review.
• Effectiveness review: Periodically test and assess whether the compliance controls are working, identify gaps, and adjust policies, procedures, or controls accordingly.
• Training program: Educate personnel in anti money laundering and terrorist financing awareness, reporting duties, and escalation processes.

Entities such as money services businesses, real estate professionals, trust companies, life insurers, credit unions, securities dealers, and accounting firms are among the businesses subject to these regulatory requirements.

The Role of a Compliance Officer

A designated compliance officer plays a pivotal role in a robust compliance program. Their responsibilities include:

1. Overseeing reporting obligations, ensuring timely financial transactions and reports to FINTRAC and other authorities.
2. Ensuring record keeping and archival of required documents, such as account opening file, beneficial owner data, large cash transaction record, and transactional logs.
3. Conducting ongoing monitoring of business relationships, detecting suspicious transactions, and coordinating submission of STRs.
4. Carrying out effectiveness reviews and audits to evaluate compliance program performance.
5. Supervising staff training program and maintaining compliance documentation.
6. Advising management on risk assessment, regulatory changes, and other relevant factors affecting compliance posture.

The compliance officer must remain independent, empowered, and credible to maintain integrity within the organization and satisfy FINTRAC’s expectations.

Consequences and Penalties for Non-Compliance

Non compliance with FINTRAC obligations can lead to severe consequences, including:

• Administrative monetary penalties imposed by regulatory authorities.
• Reputational harm, loss of trust, and scrutiny by Reports Analysis Centre and law enforcement.
• Regulatory enforcement actions, injunctive relief, or criminal charges in cases of willful violations.
• Proceeding in Federal Court or regulatory tribunals to challenge fines or corrective orders.
• Exposure to criminal penalties for serious violations of the Terrorist Financing Act or PCMLTFA.

Moreover, failure to file reports or maintain adequate compliance program may facilitate money laundering or terrorist financing, thereby attracting further regulatory intervention and risk to the organization.

Assessing Your Business’s Legal Needs

Before engaging a FINTRAC compliance lawyer, it is essential to evaluate your business’s legal priorities:

• What is the nature of your operations? Are you a real estate broker, sales representative, accounting firm, life insurance company, credit union, or securities dealer subject to FINTRAC regulation?
• Do you already have a compliance program in place? If so, when was the last effectiveness review or audit?
• Have you faced non compliance notices, or experienced an investigation by FINTRAC or the Reports Analysis Centre?
• What is your risk exposure given your business’s size, volume of financial transactions, use of virtual currency, or delivery channels?
• Do you need litigation support to challenge administrative monetary penalties or defend criminal charges?

A seasoned FINTRAC compliance lawyer can provide valuable insights, tailor a remediation strategy, and represent you through regulatory or judicial proceedings.

Importance of Record Keeping

One of the cornerstones of a defensible compliance posture is diligent record keeping. Under FINTRAC and the PCMLTFA, entities must maintain precise and reliable records of:

• Client identification information, including beneficial owner, third-party determinations, and supporting identity documentation.
• Details of financial transactions, large cash transactions, electronic funds transfer records, and flagged suspicious transactions.
• Logs of business relationships, account opening files, and periodic updates.
• Audit trails, effectiveness review outcomes, training files, and policy revisions.

These records must be retained for prescribed retention periods (often five years or more) and be readily accessible to regulatory examiners. Proper record keeping obligations enable organizations to demonstrate that reasonable measures were taken to deter money laundering and to comply with their compliance obligations.

Effectiveness Review

An effectiveness review is a structured evaluation of your compliance program to ensure it operates as intended. Key features include:

• Testing whether controls and procedures detect suspicious transactions, terrorist financing activities, or breaches in business relationships.
• Assessing how well your compliance officer and staff execute daily compliance duties.
• Identifying weaknesses or gaps (e.g. training program, record keeping, monitoring, or risk-based filtering).
• Producing a report recommending enhancements and remediation steps.
• Integrating feedback into the next cycle of risk assessment and strengthening policies.

Regular effectiveness review is essential to maintain FINTRAC compliance, address evolving risks, and adapt to shifting regulatory requirements.

Financial Transactions and Reports

Under FINTRAC, regulated entities may be required to file multiple financial transactions and reports, including:

• Large cash transaction reports when a single transaction exceeds prescribed thresholds.
• Electronic funds transfer reports for cross-border transfers.
• Suspicious transaction reports whenever there are reasonable grounds to suspect money laundering and terrorist financing.

These filings are directed to the Reports Analysis Centre, which analyzes trends, patterns, and suspicious behaviour, and may refer cases to enforcement agencies for further investigation.

Entities must carefully monitor financial transactions to identify red flags, apply reasonable measures, and escalate suspicious patters. The timeliness and accuracy of such reports analysis is critical to fulfilling reporting obligations and mitigating regulatory risk.

The Benefits of Hiring a FINTRAC Compliance Lawyer

Engaging specialized counsel offers multiple tangible advantages:

• Custom drafting and implementation of a robust compliance program tailored to your sector.
• Strategic risk assessment, gap analysis, and recommendations for improvement.
• Legal defence against notices, administrative monetary penalties, or challenges in Federal Court.
• Assistance with regulatory reviews, audits, non compliance findings, or enforcement proceedings.
• Expert guidance in designing training, record keeping, and effectiveness review protocols.
• Insights into evolving FINTRAC compliance policies, precedent, and regulatory trends.
• Representation in matters involving money laundering, terrorist financing, or allied investigations.

Our team of FINTRAC compliance lawyers in Toronto brings deep experience, litigation skills, and regulatory fluency to defend your interests and build compliance resilience.