Bill C-2: Canada’s Crusade to Reform AML and Enhance FINTRAC Powers

In 2024, the federal government signaled that it planned to significantly strengthen Canada’s anti-money laundering (AML) legislative regime (our summary here) Canada’s 2024 Fall Economic Statement signals significant changes ahead for economic sanctions, modern slavery, and AML measures).  Following that preview, on June 3, 2025, Parliament introduced the Strong Borders Act (Bill C-2).^[1]

If adopted, Bill C-2’s amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and certain of its regulations will have the following watershed consequences for Canadians:

• reporting entities will all have to be enrolled with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and will face much higher penalties for non-compliance than under the current penalties regime; and
• a prohibition on any person or entity, including charities, on receiving payments in cash of C$10,000 or more for business purposes (and in the case of charities, as a donation), unless an exemption applies under regulation.

Bill C-2 proposes significant amendments across a number of other statutes with the intent to broadly strengthen Canada’s ability to investigate and prevent money laundering activity. For a summary of Bill C-2’s proposal to enact provisions in the Criminal Code that will give law enforcement access to an individual’s “subscriber information”, including personal information, online unique identifiers and transmission data when using internet services, see our team’s related client bulletin.

Key Changes to the AML Regime in Strong Borders Act (Bill C-2)

1. Mandatory FINTRAC enrolment and periodic renewal for all reporting entities
2. Broadened classification of “very serious” violations to include AML compliance program requirements
3. Increasing the maximum administrative monetary penalties (AMPs) FINTRAC can impose for non-compliance by 40 times the current range,
4. A shift from an optional to a mandatory compliance agreement regime
5. Ban on large cash transactions and third-party cash deposits
6. Expanded public-private information sharing provisions

In this post, we elaborate on these proposed legislative amendments and discuss the potential implications involved. 

FINTRAC Enrolment of all Reporting Entities

Currently, most entities that are subject to the PCMLTFA do not have to enroll with FINTRAC. Under Bill C-2, this will change and all reporting entities will be required to register with FINTRAC. Businesses impacted by the new enrolment requirement include, but are not limited to:

• Banks, credit unions and credit union centrals
• Trust and loan companies
• Securities dealers
• Casinos
• Financing or leasing entities, and factors
• Life insurance companies, brokers and agents
• Mortgage administrators, brokers and lenders
• Real estate brokers, sales representatives and developers
• Dealers in precious metals and stones

Enrollment with FINTRAC means that reporting entities will be subject to additional reporting requirements including providing notice to FINTRAC when information in its enrolment application changes and ensuring that it submits a renewal before the expiration of the enrolment. Of particular interest to large financial institutions is FINTRAC’s ability to revoke enrolment as a reporting entity if it fails to respond to the regulator’s information request within 30 days after it is made, or for another reason. It is unclear what the cascading impacts of an enrolment system would be for complex or larger institutions that engage in activities that are outside FINTRAC jurisdiction. Under the current registration regime, a money services business (MSB) must register with FINTRAC before they begin to operate, not just engage in MSB activities.

This enrolment addition exempts domestic and foreign MSBs who are already required to register under the existing regime.

Much Higher Penalties

Bill C-2 will, if passed, implement the 2024 Fall Economic Statement’s proposal to increase administrative monetary penalty (AMP) amounts by 40 times. FINTRAC has the authority to impose AMPs on reporting entities for non-compliance. The quantum depends on whether the violation is classified as minor, serious, or very serious.

_{*All amounts in Canadian dollars and imposed are per violation.
**Certain violations will have a cap of $4 million if committed by an individual, and $20 million if committed by an entity.}

An AMP can exceed the monetary caps listed above based on income or revenue

• For individuals, the cumulative AMP maximum is either $4 million or 3% of their gross global income in the preceding year, whichever is greater
• For entities, it will be $20 million or 3% of its gross global revenue of its global corporate group in the preceding financial year, whichever is greater.

This means a Canadian entity that sits within a foreign group of companies may be fined up to 3% of its foreign group’s global revenue. This aligns with the introduction of a reporting entity’s “ability to pay” as a factor when quantifying the AMP.  We expect that the increased financial exposure in the new AMP ranges, will lead to further challenges of FINTRAC’s decisions at the Federal Court of Canada.

Escalated AML Compliance Program Requirements

Under Bill C-2, FINTRAC will not only be able to review a reporting entity for compliance with the PCMLTFA and its regulations, but also examine the records and inquire into the affairs of any person or entity FINTRAC believes on reasonable grounds to be a reporting entity.

Currently, the PCMLTFA requires reporting entities to have an AML compliance program “intended to ensure their compliance” with the statutory and regulatory AML regime. Bill C-2 proposes to strengthen this requirement, requiring that AML compliance programs are “reasonably designed, risk-based and effective”. It further proposes to escalate a compliance program violation from its current classification of “serious” to “very serious”, thus increasing the financial and reputational exposure for reporting entities whose compliance programs are found to be lacking.

Although the existing regime already expects reporting entities to take a risk-based approach and test the effectiveness of its compliance program no less than every two years, statutorily mandating a reasonably designed, risk-based and effective compliance program will provide FINTRAC with wide latitude to scrutinize and challenge AML programs. 

New Offences and Prohibitions

A reporting entity that receives an AMP for a prescribed violation must, under Bill C-2, enter into a compliance agreement with FINTRAC. Refusing to enter into a compliance agreement, or failing to comply with it, will result in a compliance order, and any contravention with such order is considered a new violation under the Act, which would lead to further fines.

Bill C-2 also introduces provisions that will make it an offence if a reporting entity knowingly:

• withholds material information; or
• provides or makes a false or misleading statement, including by omission.

Finally, for account opening, currently, the PCMLTFA prohibits opening accounts if identity verification cannot be duly performed on the potential customer. The amendments will explicitly prohibit the opening of an anonymous account or for an “anonymous end client”, defined as someone whose name is “obviously fictitious”.

Private-Public Information Sharing

The lack of ability to share information for AML purposes has long been deliberated in Canada. Bill C-2 proposes changes to the PCMLTFA, Personal Information Protection and Electronic Documents Act and Office of the Superintendent of Financial Institutions Act, in order to permit information exchange between public and private entities with access to relevant information to detect suspicious activity.

These changes, if implemented, will:

• allow reporting entities to collect an individual’s personal information without their knowledge or consent to provide to law enforcement for AML, anti-terrorist activity financing or anti-sanctions evasion purposes, or another purpose that is “consistent” with one of the foregoing
• entitle FINTRAC to exchange information with the Superintendent of Financial Institutions, the Commissioner of the Financial Consumer Agency of Canada, the Governor of the Bank of Canada, the Chief Executive Officer of the Canada Deposit Insurance Corporation, and the Deputy Minister of Finance
• authorize FINTRAC to disclose specific information to the Commissioner of Canada Elections where reasonable grounds to suspect information is relevant to a violation of the Canada Elections Act

Key Takeaway

Although Bill C-2 has not yet been enacted, its proposed reforms have the potential to recalibrate Canada’s AML, anti-terrorist financing and sanctions evasion framework. We expect the new laws, if they come into force, to significantly increase compliance expectations for reporting entities (and potentially other businesses) – while enhancing the investigative and enforcement powers of public bodies.

We will continue to track the progress of Bill C-2 and will post updates as they become available.

If you have any questions on how the Strong Borders Act may impact your business, please reach out to your legal professional at McCarthy Tétrault or contact one of the authors below.

^[1] Bill C-2, An act respecting certain measures relating to the security of the border between Canada and the United States and respecting other related security measures.