Money Services Businesses (MSBs) in Canada play a vital role in the financial system, but with that role comes significant regulatory responsibility. Whether launching a startup MSB or acquiring a shelf company, businesses must comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, is the regulatory body responsible for enforcing these obligations. Failure to comply can result in substantial fines, reputational damage, and even criminal prosecution.

This article outlines the key FINTRAC violations, the corresponding penalties, and how your MSB can remain compliant and penalty-free.

What Are Administrative Monetary Penalties (AMPs)?

Administrative Monetary Penalties (AMPs) are fines imposed by FINTRAC when a business breaches the PCMLTFA. These penalties are civil (not criminal) but may be made public and carry serious business consequences.

FINTRAC uses a risk-based assessment model, and penalties fall into three categories:

• Minor violations: $1–$1,000
• Serious violations: $1–$100,000
• Very serious violations: $1–$500,000 for businesses; $1–$100,000 for individuals

The severity depends on factors such as the nature of the violation, harm caused, compliance history, and size of the business.

Common FINTRAC Violations and Their Penalties

1. Failure to Report Suspicious Transactions (STRs)

MSBs must file Suspicious Transaction Reports (STRs) when there are reasonable grounds to suspect that a transaction or attempted transaction involves money laundering or terrorist financing. This applies regardless of whether the transaction was completed.

Penalty: Up to $100,000 per violation for individuals and $500,000 for businesses

Example: An MSB was fined $76,000 for failing to report multiple suspicious deposits despite signs of structuring and third-party involvement.

Learn more about our CAMLO/MLRO Services to ensure your reporting obligations are met.

2. Failure to Report Large Cash Transactions (LCTRs)

Cash transactions of $10,000 or more—or multiple smaller transactions totaling that amount within 24 hours—must be reported as Large Cash Transaction Reports (LCTRs).

Penalty: Up to $250,000 per unreported transaction

Example: A Toronto-based MSB was fined $120,000 for failing to aggregate cash deposits from the same client made within a 24-hour period.

An Effectiveness Review can help identify gaps in your transaction monitoring system.

3. Failure to Report Large Virtual Currency Transactions (LVCTRs)

Since 2021, MSBs must file a Large Virtual Currency Transaction Report (LVCTR) for any single or aggregated receipt of $10,000 or more in virtual currency within 24 hours.

Penalty: Up to $500,000 depending on severity and recurrence

Requirements:

• Aggregation of related transactions
• Identification of sender/receiver
• Record-keeping and timely filing

Read FINTRAC’s guidance to understand LVCTR compliance, or contact us for support.

4. Failure to Report Electronic Funds Transfers (EFTRs)

Any electronic transfer of funds $10,000 or more into or out of Canada must be reported via an Electronic Funds Transfer Report (EFTR). This includes SWIFT payments and remittance services.

Penalty: Up to $250,000 per violation

Reliable compliance automation and MSB Registration Services in Canada ensure your business is ready from day one.

5. Failure to Submit Terrorist Property Reports (TPRs)

MSBs must report any property in their possession that is owned or controlled by a listed terrorist entity under Canadian law.

Penalty: Up to $500,000 and/or criminal prosecution

Reports must also be submitted to RCMP or CSIS. Ignoring this obligation can lead to severe consequences beyond AMPs.

Refer to FINTRAC’s Guide 5 for full details.

6. Inadequate Record Keeping

FINTRAC requires MSBs to retain records of:

• STRs, LCTRs, EFTs, LVCTRs
• Client identification documents
• AML training logs
• Business relationship documentation

Records must be maintained for at least five years.

Penalty: $10,000–$100,000 depending on deficiencies

Regulatory Remediation can help fix broken documentation processes.

7. Deficient AML Compliance Program

A complete AML compliance program for MSBs must include:

• Written policies and procedures
• A formal risk assessment
• Appointment of a compliance officer
• Ongoing training
• Independent effectiveness review every two years

Penalty: Up to $500,000

Failure to implement a proper AML program was the basis for a $210,000 fine levied against one MSB. Use AML Incubator’s AML compliance services to design and maintain a fully compliant program.

Legal and Business Consequences of FINTRAC Breaches

AMPs are only part of the risk. Non-compliant MSBs may also face

• Public disclosure on FINTRAC’s enforcement site
• Loss of MSB registration
• Criminal investigation and charges
• Termination of banking and payment relationships

FINTRAC takes a zero-tolerance approach to willful blindness or systemic neglect.

How MSBs Can Stay Compliant

Here’s how to build a culture of compliance and avoid penalties:

Build a Strong AML Program

Tailor policies to your business risks. Review them annually.

Monitor and Report Transactions

Automate alerts for STRs, LCTRs, LVCTRs, and EFTRs.

Document Everything

Keep well-organized, accessible records for five years.

Train Your Team

Employees must understand red flags and reporting triggers.

Perform Regular Reviews

Independent assessments help identify gaps and improve effectiveness.

Partner with AML Incubator—Your Trusted Partner in Regulatory Excellence—to get expert support for ongoing compliance.

Final Thoughts

FINTRAC fines can devastate businesses that neglect compliance. Whether it’s a missed suspicious transaction or a missing virtual currency report, the cost of error is high—but preventable.

By investing in structured AML compliance programs, automated reporting, and expert guidance, your MSB can thrive while staying on the right side of regulation.

Further Reading

• How to Hire a CAMLO in Canada
• Navigating Compliance Challenges in FinTech
• Understanding Decentralized Finance: The Future of Financial Services