Why Senior Managers Can’t Ignore AML/ATF Obligations

What Canadian Law Says About AML Responsibility

PCMLTFA and Director Liability

Senior management is legally responsible for ensuring the organization has a compliant AML program, even if a CAMLO is appointed. Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the board and C-suite cannot claim ignorance when facing regulatory scrutiny.

FINTRAC’s Enforcement Outlook

FINTRAC has moved toward naming directors and officers in enforcement actions where there is systemic failure or willful negligence. These cases often involve failures in oversight, risk assessment, or failure to implement corrective action following internal reviews.

Who This Applies To

Key Roles at Risk

• CEOs and founders

• CFOs and finance leads

• Board members

• General managers of Canadian operations

Foreign-Owned Entities

Foreign companies operating MSBs in Canada or serving Canadian clients, are not exempt. The same responsibilities apply to parent company directors and officers when a Canadian affiliate is under review.

What Are a Senior Manager’s AML/ATF Duties?

Oversight and Accountability

Leading Compliance, Not Just Signing Off

A senior manager’s duty goes beyond approval. They must understand the AML risks the business faces and ensure that the compliance team has adequate authority, budget, and resources.

Example – FINTRAC Penalties for Board Failures

In several recent public notices, FINTRAC outlined cases where directors were held accountable for failing to review the effectiveness of their AML programs or ignoring red flags raised by internal compliance teams.

Policy and Program Duties

Approving AML Policies

Policies and procedures must be reviewed and approved by senior leadership. This includes the AML manual/written compliance program, reporting obligations, escalation protocols, and ongoing training programs.

Understanding the Risk-Based Approach (RBA)

FINTRAC requires that AML programs be tailored to the specific risks of the business and of clients. Senior management must review and understand the institution's risk assessment and ensure it's kept up to date, along with conducting proper due diligences when onboarding clients.

Related: Risk-Based Approach: Why It’s Mandatory for MSBs in Canada

What Happens If Senior Management Fails?

Regulatory Consequences

Fines and Public Notices

FINTRAC can name directors, officers, or owners in its published enforcement actions; potentially damaging reputations and deterring future business partnerships.

Criminal Liability and Reputational Risk

While rare, severe cases of willful blindness or facilitation of financial crime could result in criminal charges. Even without legal proceedings, reputational damage can be irreversible.

Organizational Fallout

Frozen Bank Accounts and Loss of Partnerships

Banks may terminate MSB relationships if the board fails to meet compliance standards. Payment processors and investors may follow.

Remediation Costs and Operational Delays

Companies found in breach may need to conduct expensive remediation projects and suspend operations during reviews.

Related: Regulatory Remediation

How Can Leaders Fulfill Their AML/ATF Obligations?

Build a Culture of Compliance

Tone from the Top

Senior managers set the tone. This means conducting annual program reviews, attending training sessions, and maintaining direct contact with the CAMLO.

Appointing a Qualified CAMLO

Leadership must ensure that the Chief AML Officer (CAMLO) is not just a figurehead. The CAMLO should have relevant experience, adequate support, and independence.

Related: CAMLO/MLRO Services

Conduct Independent Program Testing

Importance of the Effectiveness Review

FINTRAC expects an independent effectiveness review at least every two years. Senior managers must review and sign off on the results and act on any deficiencies.

Related: Effectiveness Review

Documenting Corrective Action

When a review identifies gaps, senior management must ensure remediation is tracked, documented, and completed within a reasonable timeframe.

Final Thoughts: Compliance Is Leadership

The Board Is Always on the Hook

Whether you operate a crypto exchange, a cross-border payments company, or a legacy MSB, regulators will look to your boardroom when something goes wrong.

Be Proactive, Not Reactive

AML Incubator supports senior executives with tailored assessments, ongoing CAMLO support, and proactive remediation strategies. Don’t wait for a regulatory knock at the door.

Start with a free consultation with AML Incubator to ensure your business and leadership team are aligned with today’s compliance expectations.