The TOP Red Flags under FINTRAC and how to deal with them
FINTRAC's Authority and Expectations for MSBs
Canadian Money Services Businesses (MSBs) should be aware of their Anti-Money Laundering (AML) responsibilities as the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) increases internal compliance investigation efforts.
FINTRAC is not only stepping up investigationsâcertain businesses will notice a sudden uptick in reporting requestsâbut it also has new compliance expectations for MSBs. These came into force with the Retail Payment Activities Act (RPAA).
The easiest way to avoid scrutiny is to build a culture of compliance from the ground up. This includes knowing the top money laundering red flags MSBs must watch for in 2025.
FINTRAC, Canada's financial intelligence agency, tracks and traces money flows to prevent money laundering and terrorist financing. MSBs registered with FINTRAC must comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) by conducting client due diligence, submitting reports, and keeping detailed records.
Failing to recognize or report suspicious activity can lead to fines, loss of banking access, reputational damage, or even criminal charges. You can view the full list of FINTRAC red flags here.
Universal Red Flags for MSBs
The following are the most common red flags to monitor. They should be embedded into your ongoing risk-based approach to AML compliance.
Client Identification and Transaction
Inconsistent or Suspicious Identification
The risk-based approach requires MSBs to assess the risk level of their clients, services, and business modelsâand respond proportionally.
If a client presents a red flag, this doesnât automatically imply criminal intent. It means additional questions should be askedâor a Suspicious Transaction Report (STR) submitted to FINTRAC.
For high-risk clients or transactions, consider using our Enhanced Due Diligence (EDD) Services.
Want to dive deeper into what the risk-based approach means for your MSB? Read our blog:
đ Why Must Canadian MSBs Utilize the Risk-Based Approach for AML Compliance?
Canadian MSBs must have internal controls to monitor and escalate suspicious activity. That includes:
Keep records of:
Not sure where your compliance gaps are? Get a full Effectiveness Review from AML Incubator.
In 2024 and early 2025, FINTRAC stepped up enforcement by publicly naming non-compliant MSBs and levying large Administrative Monetary Penalties (AMPs).
If your MSB has been finedâor you fear it might be nextâwe offer Regulatory Remediation Services to help you recover and rebuild.
Banks and payment processors are increasingly cautious. Weak AML programs can lead to:
Explore our blog on the topic:
đ MSB Registration in Canada - to 10 reasons
Red flags are not just a checklistâthey're a mindset. A proactive compliance culture protects your business and helps build credibility with regulators, partners, and clients alike.
Whether you're just starting your MSB Registration or responding to a regulatory investigation, AML Incubator is your trusted partner in regulatory excellence.
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