Understanding the AML Effectiveness Review Requirement Under FINTRAC

Under Canadian law, every reporting entity regulated by FINTRAC must complete an effectiveness review at least once every 24 months following their first transaction. This includes money services businesses (MSBs), crypto platforms, payment processors, and FinTech firms operating in Canada.

The review must begin no later than 24 months after the start date of the last review. If your previous review started on July 1, 2023, the next must begin by July 1, 2025.

Missing that deadline places your organization in breach of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

Why AML Reviews Matter for MSB Compliance in Canada

Completing the review on time is one of FINTRAC’s five foundational AML obligations, along with:

• Appointing a Compliance Officer or CAMLO

• Developing written policies and procedures

• Conducting risk assessments

• Delivering ongoing AML training

Missing the review is treated as seriously as any of the above. In fact, a significant portion of FINTRAC enforcement actions in recent years have involved failures to complete or properly document AML effectiveness reviews.

For a breakdown of AML Incubator’s leadership-level compliance support, see CAMLO/MLRO Services.

What Happens If You Miss the AML Review Deadline?

Regulatory Penalties for Non-Compliance with FINTRAC

Failure to meet the two-year requirement is a direct breach of Canadian AML law. This may result in an Administrative Monetary Penalty (AMP). Penalties can range from tens of thousands to several hundred thousand dollars per violation, depending on severity and prior infractions.

FINTRAC also publishes all AMPs publicly, potentially damaging your reputation and future regulatory standing.

If your organization is already at risk, visit our Regulatory Remediation page for help.

Risk of FINTRAC Compliance Examinations

Missing a scheduled review may trigger a FINTRAC compliance examination. These exams are time-intensive and often result in findings that go beyond the original issue.

Once flagged, your entire AML program may be scrutinized. This increases exposure to further findings, remediation demands, and possible repeat penalties.

Banking Challenges for MSBs and FinTech Companies

Canadian banks frequently request copies of your latest AML effectiveness review. If you cannot provide a current report, your banking relationship may be downgraded, frozen, or terminated.

This is especially serious for MSBs that depend on payment processing and correspondent banking relationships. Failure to produce a review report can also affect your ability to onboard new banking partners.

MSB Licensing and Renewal Risks

If your MSB registration is up for renewal and FINTRAC discovers you missed a required review, you could face additional conditions or even registration refusal.

Repeated non-compliance increases the likelihood of suspension or revocation.

Reputational Damage Across the Compliance Ecosystem

Public penalties, failed bank onboarding, and regulatory findings can undermine investor trust, customer confidence, and vendor relationships. Once classified as a high-risk or non-compliant MSB, regaining institutional trust becomes extremely difficult.

What to Do if Your AML Review Is Overdue

Step 1: Start the Review Immediately

Begin the review process as soon as the lapse is discovered. FINTRAC prefers a late but completed review over continued inaction.

Step 2: Engage a Qualified External Reviewer

Hiring an independent third party helps demonstrate objectivity and urgency. AML Incubator provides Effectiveness Review services specifically designed for MSBs and FinTechs that need urgent or overdue compliance support.

Step 3: Document and Escalate Internally

Inform senior management and create a record of the issue, including when the lapse was discovered and how it’s being resolved. This shows FINTRAC that your organization has taken ownership.

Step 4: Resolve All Issues Identified

A proper review will uncover compliance gaps. These must be addressed immediately. Common findings include outdated policies, gaps in training records, or ineffective transaction monitoring.

Step 5: Prepare for Regulator or Bank Inquiries

If a FINTRAC audit or bank due diligence review occurs, you’ll need to explain the delay and demonstrate clear corrective actions. Have records ready and ensure your Compliance Officer or CAMLO is aligned.

How to Avoid Missing AML Effectiveness Review Deadlines in the Future

Set a Company-Wide Calendar Reminder

Create a calendar reminder at least 22 months after your last review to allow sufficient time for scheduling and completion. Avoid relying on a single person’s memory or inbox.

Assign a Clear Owner Internally

Make review scheduling part of your Compliance Officer’s core responsibilities. For extra assurance, contract a third-party reviewer at the start of each cycle.

Keep a Running Compliance Log

Maintain records of all AML activity throughout the year—training, STRs, policy updates. This reduces prep time and ensures your reviewer has the full picture.

Build It Into Your Annual Compliance Cycle

Even if the full review is biennial, conduct internal spot checks each year. This strengthens your overall compliance posture and makes reviews easier to manage.

Outsource When Capacity Is Limited

Small teams, startups, or companies undergoing rapid change should consider outsourcing the entire review cycle. AML Incubator offers Effectiveness Reviews tailored to Canada’s MSB and crypto regulations.

Final Thoughts on AML Reviews and Regulatory Risk

Missing an AML effectiveness review deadline exposes your organization to real legal and business risk. But a late review is still better than no review at all. Take action, engage professionals if needed, and build systems that prevent future lapses.

AML Incubator works with regulated entities across Canada to deliver timely, independent AML reviews with clear remediation guidance and regulator-aligned documentation.

Need help? Start your next Effectiveness Review today with AML Incubator—your trusted partner in regulatory excellence.