Understanding AML Fines in the Canadian Context

When FINTRAC or other regulatory bodies determine that a business has failed to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), they may impose administrative monetary penalties (AMPs). These fines vary depending on the nature, frequency, and severity of the violation.

Common reasons for penalties include:

• Inadequate AML program design

• Lack of transaction monitoring and client risk rating

• Failure to report suspicious transactions

• Poor recordkeeping or outdated policies

• Non-compliance with updated regulatory expectations, including the Risk-Based Approach (RBA)

In Canada, even small or medium-sized money services businesses (MSBs) have faced significant penalties. For example, a company in Ontario was fined over $100,000 in 2023 for failing to assess client risk and perform proper due diligence. These aren't rare occurrences and they reflect a growing emphasis on proactive oversight.

Why Do AML Fines Occur?

1. Weak AML Program Foundations

Canadian MSBs are required to have a fully implemented AML program that includes KYC, CDD, ongoing monitoring, and internal controls. Many businesses still treat these as checkboxes rather than live processes.

2. Gaps in Suspicious Transaction Reporting

Failing to file Suspicious Transaction Reports (STRs) on time, or not filing them at all, is one of the most common violations. In some enforcement cases, STRs were only filed months after the suspicious activity occurred.

3. Inadequate Recordkeeping

Businesses must retain specific AML records, including client identification and transaction details, for at least five years. Missing or improperly maintained records often result in additional scrutiny.

4. Lack of Internal Oversight

Not assigning a qualified CAMLO or failing to conduct internal audits weakens the program. FINTRAC expects not only documentation but also demonstrable effectiveness.

5. Failure to Update Policies

Canadian AML obligations evolve frequently. Your policies are out of date if you haven't revised them since before the 2021 changes to the PCMLTFA or if they don't cover virtual currency.

The Role of Remediation

Remediation is about rebuilding the credibility of your compliance framework. A good remediation strategy involves reviewing the entire AML lifecycle, addressing root causes, and putting measures in place to ensure lasting alignment with regulatory standards.

Remediation can significantly reduce future penalties and is often required to reestablish access to essential services such as correspondent banking.

What to Do After Receiving an AML Fine

Conduct a Root Cause Analysis

Begin with a structured investigation into the compliance failure. This might involve:

• Reviewing STR filing logs for patterns of delay or misclassification

• Cross-checking onboarding procedures against real case files

• Mapping gaps between what’s written in your AML policy and what is practiced operationally

Bring in External Experts

If your internal compliance team lacks experience with regulatory remediation, consider working with a specialist like AML Incubator. A third-party can provide a neutral assessment and assist in preparing a regulator-facing corrective action plan.

Services like CAMLO/MLRO outsourcing or an Effectiveness Review are especially useful when rebuilding trust with FINTRAC.

Train Your Team

It’s not enough to update policies... your team needs to understand them. Many AML fines in Canada stem from frontline staff not recognizing red flags or failing to escalate suspicious behaviour. Training should be specific to your sector, client base, and transaction types.

Upgrade Monitoring Capabilities

Modern AML programs require dynamic, risk-based monitoring—not static rules. If your business handles digital assets or international payments, consider incorporating tools that support:

• On-chain wallet analytics (for crypto)

• Behavioral transaction monitoring

• Country- and client-risk flagging

Token Due Diligence and EDD Services from AML Incubator help detect risks that basic rule engines may miss.

Submit a Corrective Action Plan

FINTRAC and other regulators often expect a formal written plan that outlines:

• Each deficiency identified

• Specific actions being taken

• Timeframes for implementation

• Assigned responsibilities

This plan should also include your methodology for validating effectiveness, such as new audit cycles or mock reviews.

Strengthen Auditing and Internal Controls

Remediation isn’t complete without a strong internal review system. Businesses should:

• Conduct quarterly internal audits

• Implement peer reviews for KYC files

• Log all AML policy changes with version history

This demonstrates ongoing accountability and readiness for future inspections.

Examples of What Changes in a Successful Remediation

Outsourcing as a Strategic Move

Many firms opt to outsource compliance after receiving a fine. It provides:

• Access to specialized expertise

• Reduced operational cost

• Faster turnaround on remediation steps

• Independent validation of fixes

AMLI’s Regulatory Remediation services are built specifically for MSBs and FinTechs looking to recover from regulatory actions. From rebuilding documentation to engaging with FINTRAC directly, AMLI supports every phase of your recovery.

Final Thoughts

An AML fine is not the end of your business, it’s a signal that change is needed. With the right remediation strategy, organizations can come out stronger, more transparent, and more attractive to clients, partners, and regulators.

Make remediation a turning point. Strengthen your controls, train your team, modernize your tools, and move forward with confidence.

Your Trusted Partner in Regulatory Excellence.

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Further Reading:

• How to Hire a CAMLO in Canada

• Challenges Facing Small and Medium European VASPs and MSBs as MiCA Regulations Loom