Canada’s AML Reform Advances: Bill C-12 Brings Hefty Penalties And Higher Compliance Expectations Into Force

Parliament has now enacted significant amendments to Canada’s anti-money laundering (AML) regime through the Strong Borders Act (Bill C-12),¹ which, among other things, make hefty penalties and increased expectations for AML compliance a reality for businesses in Canada subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)(PCMLTFA) and administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

Not to be confused with Bill C-2 with the same name, Bill C-12 reiterates certain measures proposed in Bill C-2, but on an expedited assent timeline. Bill C-12 received Royal Assent on March 26, 2026.

For our previous discussion about changes in Bill C-2, many of which were carried and brought into force by Bill C-12, read here: “Bill C-2: Canada’s Crusade to Reform AML and Enhance FINTRAC Powers”.

Key Changes in Effect

1. Increased maximum administrative monetary penalties (AMPs)
2. Mandatory compliance agreement regime
3. Higher standards and expectations for AML compliance programs
4. Opening accounts with anonymous clients or under clearly fictitious names prohibited
5. Expanded FINTRAC enforcement and monitoring powers²

Key Changes Not Yet in Force and Proposed Measures

1. Universal FINTRAC enrolment (not yet in force). See our previous article for details on mandatory FINTRAC enrolment and notification for all reporting entities. 
2. Comprehensive ban on large cash transactions (proposed in Bill C-2)
3. Prohibition of third-party cash deposits (proposed in Bill C-2)
4. Expanded public-private information sharing for AML purposes (proposed in Bill C-2).

In this post, we elaborate on key changes that we did not address in our previous article.

Revised AMP Framework and Maximum Penalties

The following table summarizes the revised maximum AMPs introduced by Bill C‑12, which increase the maximum AMP amounts by 40 times the amounts in place before the enactment of Bill C-12.

NEW AMP MAXIMUMS*

*All amounts in Canadian dollars

AMP exposure for businesses that have affiliates outside Canada may be assessed by reference to global revenues rather than just domestic operations, which can result in penalties of billions of dollars. This is curtailed by the criteria for assessing penalties (other than for violations that have a fixed amount), which must take into account:

• that the PCMLTFA is intended to encourage compliance rather than to punish;
• the harm caused by the violation(s); and
• the reporting entity’s ability to pay.

We continue to expect that the increased AMP ranges will lead to further challenges of FINTRAC’s decisions at the Federal Court of Canada.

Mandatory Compliance Agreements and Publication of Compliance Orders

Following a prescribed violation, FINTRAC will require the penalized person or entity to enter into a compliance agreement setting out the compliance measures required to be taken and the applicable timeline.

Where a person or entity refuses to enter into a compliance agreement or fails to comply with its terms, FINTRAC must make, publicize and serve (on the person or entity) a compliance order.

The publicized compliance order will contain details about the order, including the name of the individual or company that committed the violation, a statement that they refused to enter into a compliance agreement or failed to comply with one, and other terms such as requiring the reporting entity to publicize its corrective measures for the non-compliance, and a deadline to come into compliance with the order.

A breach of a compliance order constitutes a new violation under the PCMLTFA and may attract significant additional AMPs and enrolment revocation.

This framework establishes additional regulatory pathways to strengthen FINTRAC’s ability to require and monitor remediation.

Higher Standards for AML Compliance Programs

Historically, the PCMLTFA required reporting entities to have an AML compliance program that was “intended to ensure their compliance” with the federal AML regime. Now, the amendments require the AML compliance program of a person or business to be “reasonably designed, risk-based and effective”. FINTRAC has the latitude to assess not only whether a compliance program exists, but whether it is appropriately designed and operates effectively in practice, rather than merely meeting formal or technical requirements.

Coupled with the new compliance program violation range of penalties (see above table) and designation from the class of “serious” to “very serious”, deficiencies in AML compliance programs have the potential to attract AMPs up to the maximum amounts stated above.

Anonymous Accounts and Clients

The amendments to the PCMLTFA prohibit anonymous accounts, anonymous clients, and anyone trying to use services with obviously fictitious names.

This reinforces that reporting entities must not establish relationships or transact with anyone where they are unable to duly verify the client’s identity as required by the PCMLTFA. Although it would have been a common sense approach in order to comply with the PCMLTFA prior to Bill C-12, opening accounts in these circumstances is now expressly prohibited by the PCMLTFA.

Expanded FINTRAC Oversight

The amendments in Bill C-12 also expand FINTRAC’s examination powers. FINTRAC may now examine the records and inquire into the business and affairs not only of reporting entities, but also of persons and entities that it believes on reasonable grounds to be reporting entities.

This may broaden FINTRAC’s ability to scrutinize businesses whose status under the PCMLTFA is uncertain or under review.

Universal FINTRAC Enrolment

Bill C-12 enacts a new framework under which, once the relevant provisions come into force, all reporting entities under the PCMLTFA will be required to enrol with FINTRAC. The only businesses exempt from enrolment are domestic and foreign money services business (MSB) that are already required to register with FINTRAC.

The framework includes requirements relating to initial enrolment, renewal, updating information, and potential denial or revocation. The amendments also require FINTRAC to establish and maintain a roll of prescribed enrolment information and to make identifying information from that roll available to the public.

For many reporting entities, this represents a structural change in how the AML regime is administered and will increase the administrative obligations a reporting entity will need to meet. Non-compliance with ongoing notice requirements can result in a revocation of enrolment, which can cause significant disruption for a business. The main enrolment provisions are not yet in force and will come into force on a date to be set by order in council.

Other Notable New Offences

The amendments also increase fines for several existing offences and introduce a new offence where a person or entity that is required to provide information under the PCMLTFA knowingly withholds material information or provides false or misleading information, including by omission.

The amendments further include consequential changes to the Retail Payment Activities Act (Canada), linking certain PCMLTFA offences and violation notices to payment service provider registration consequences.

As relates to MSBs, it will be an offence to knowingly fail to meet their new due diligence obligations in accordance with the PCMLTFA before engaging an agent or mandatary to perform any of its regulated activities in Canada.

Application to Prior Violations

The amendments to the PCMLTFA include transitional provisions for violations depending on when they were alleged to have been committed:

• Part 4.1 of the former PCMLTFA continues to apply with respect to any “violation” (as defined in s. 2(1) of the former PCMLTFA) alleged to have been committed before March 26, 2026; and
• Part 4.1 of the amended PCMLTFA applies to any “compliance order violation” or “prescribed violation” (as defined in s. 2(1) of the amended PCMLTFA) alleged to have been committed on or after March 26, 2026.

One issue that may arise under the transitional provisions is whether the increased AMP maximums apply to violations that began prior to March 26, 2026, but recurred on or after that date. While this issue is not specifically addressed in the legislation, a good argument can be made that the increased AMP maximums should only apply to the portion of the violations that recurred or after March 26, 2026. Recently, in Community Trust Company v. Attorney General of Canada,³the Federal Court held that an increase to the AMP maximums in the Financial Consumer Agency of Canada Act should be interpreted as applying only to violations that took place on or after the date when the increase came into force, even though the violations began prior to that time. As set out in our previous client bulletin, the Court held that the portion of the violations which occurred before the enactment date of the increases were subject to the lower AMP maximums in force at the time when those violations were committed. While the Community Trust case dealt with a different statutory regime, the text of the amended PCMLTFA supports a similar outcome.

For reporting entities across all sectors, these changes are likely to increase both compliance expectations and enforcement risk. Businesses should consider whether their existing AML frameworks are sufficiently robust to meet the heightened statutory standard and be prepared for additional obligations, including enrolment requirements, as the remaining provisions come into force.

We will continue to monitor the implementation of these reforms and provide updates as further guidance becomes available

Footnotes

1 Bill C-12, An Act respecting certain measures relating to the security of Canada’s borders and the integrity of the Canadian immigration system and respecting other related security measures.

2 In addition, Bill C-15 An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025 also received Royal Assent on March 26, 2026, which enacted amendments allowing disclosure of certain reports among government agencies and law enforcement.

3 2026 FC 58.

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