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The Government of Canada sends a clear message with the release of Budget 2025 on November 4, 2025.1 Canada's sanctions, anti-money laundering ("AML") and anti-terrorist financing ("ATF") regimes would see reforms to increase supervision and enforcement, and new changes to compliance requirements. The McMillan International Trade Group closely monitors this rapidly changing space and has written extensive bulletins as developments have emerged, particularly with respect to the sanctions on Russia.2 This bulletin contains key takeaways on the continuing evolution of Canada's sanctions and AML/ATF regimes from Budget 2025.
Homing In on the Prevention and Investigation of Financial Crimes
As financial crimes have grown increasingly complex with cross-border implications, the Government of Canada seeks to address long-standing gaps in consumer protection and institutional accountability. Budget 2025 positions the Government of Canada's National Anti-Fraud Strategy (Strategy) within a broader regulatory framework that is headed by the Financial Crimes Agency ("FCA"), Canada's new enforcement agency against financial crimes.3
The FCA will replace the RCMP's role to investigate complex cases including money laundering, organized criminal activity, and online financial scams. The FCA will be the sole lead investigations authority with specialized expertise to focus on financial crimes. The Government of Canada plans to introduce the enabling legislation by Spring 2026. Other changes on the enforcement of financial crimes are discussed below.
Increased Enforcement and Penalties in Canada's AML/ATF Regime
Budget 2025 aims to strengthen Canada's AML/ATF efforts through changes in enforcement, supervision, compliance and information sharing. Core amendments will be made to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act ("PCMLTFA"), the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations ("PCMLTFR"). the Access to Information Act, and the Personal Information Protection and Electronic Documents Act.
Budget 2025 supports key reforms to Canada's AML regime through Bill C-12. A fuller range of reforms to Canada's AML regime was initially introduced in Bill C-2 in June 2025 and motivated by the imminent mutual evaluation of Canada's AML regime by the Financial Action Task Force ("FATF").4 Bill C-12 as supported by Budget 2025 contains a smaller scope of proposed amendments on the PCMLTFA and PCMLTFR, though some key reforms on penalties and compliance remain the same.
Bill C-12 re-introduces the mandatory compliance agreement framework with higher penalties for individuals and businesses that fail to meet their AML/ATF obligations. The proposed framework requires a reporting entity found in violation of PCMLTFA to enter into a mandatory compliance agreement with the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC"), replacing the existing optional compliance agreement regime.5 Non-compliance would trigger a compliance order and additional penalties. Additionally, the PCMLTFR currently caps administrative penalties at $1,000 for minor violations, $100,000 for serious violations, and $500,000 for very serious violations.6 Bill C-12 proposes to increase administrative penalties to $40,000, $4 million, and $20 million respectively.7
Other notable updates from Budget 2025 include:
- Prohibition/limit on third-party cash deposits, payments or donations of $10,000 or more;
- Amending the PCMLTFR to ensure that mortgage administrators, mortgage brokers, mortgage lenders, are included as reporting entities; and
- Clarification of public to private information sharing provisions to better detect and deter money laundering.
Budget 2025 also calls for FINTRAC, the existing AML/ATF watch dog agency, to join as a member of the Financial Institutions Supervisory Committee ("FISC"). As a member of FISC, FINTRAC would be able to exchange information with other members as part of the Government of Canada's efforts to strengthen Canada's AML/ATF regime. Other members of FISC include the Office of the Superintendent of Financial Institutions, the Bank of Canada, the Department of Finance of Canada, the Canada Deposit Insurance Corporation, and the Financial Consumer Agency of Canada.
Financial Sector Implications Emphasized in Changes to Sanctions Regime
Under proposed changes to the Special Economic Measures Act ("SEMA"), the Minister of Finance must be consulted before new sanctions orders or regulations on certain persons or entities can be made. Budget 2025 states that this measure aims to mitigate potential financial sector risks that could arise from sanctions actions.
This amendment follows a broader trends noted in our previous bulletin, where the Government of Canada has centralized a separate sanctions enforcement regime under the purview of the Minister of Finance by building on earlier amendments to the PCMLTFA. As a result, businesses and financial institutions are now faced with an ever-growing compliance burden, including to report suspicious transactions involving sanctions individuals or entities, or face criminal liability and administrative penalties.
Another SEMA amendment from Budget 2025 will authorize the Governor in Council to require financial institutions to provide information on property that is in their possession or control, that is owned, held or controlled by a sanctioned person (or foreign state), to the Minister of Finance. The Minister of Finance may then order a financial institution to pay such profits to the Receiver General as a "Targeted Windfall Profit Charge". Budget 2025 states that this change is meant to direct profits from sanctioned properties or assets towards public policy objectives. The Government of Canada has not provided further details on how profit may be derived from assets of sanctioned individuals or entities, nor which areas of public policy should receive these profits. It will be critical for financial institutions to monitor developments in this area to assess risk exposure.
Although freshly tabled, Budget 2025 confirms the Government of Canada's heightened focus on the enforcement of AML/ATF obligations through the Strategy, amendments to AML/ATF laws and through the reforms in the sanctions regime. Businesses should be aware that these reforms have teeth, as FINTRAC recently issued a record fine of over $177 million to a cryptocurrency firm that has failed to flag and report suspicious transactions originating from Iran.8
McMillan's International Trade Group regularly monitors and reports on sanctions and AML/ATF developments.9 As the largest such group in the country, our team is well-equipped to help you navigate the changing regulatory and compliance landscape.
Footnotes
1 See Budget 2025 – Canada Strong (November 2025).
2 See previous McMillan bulletins: Careful What You Wish For! Canada Issues Long-Awaited "Guidance" on Economic Sanctions, March 28, 2024; Sanctions Enforcement Rising: Border Seizures and Forfeitures, Administrative Penalties and a New Reporting Obligation for Sanctions Evasion Offences, June 13, 2024; Canada's Anti-Money Laundering and Sanctions Overhaul Gets Serious: New Players, More Rules and Broad Reports, December 4, 2024; New Russian Sanctions and Terrorist Designations Increase Compliance Requirements for Businesses in Canada, February 26, 2025; Upcoming Changes to Canada's Anti-Money Laundering Regime – C2it that Your Business is Compliant, June 18, 2025.
3 Department of Finance Canada, Combatting financial fraud, protecting Canadians against scams and abuse (Backgrounder), October 20, 2025.
4 See previous McMillan bulletin: Upcoming Changes to Canada's Anti-Money Laundering Regime – C2it that Your Business is Compliant, June 18, 2025.
5 Bill C-12, Strengthening Canada's Immigration System and Borders Act, 1st sess, 45th Parl, 2025 (first reading 8 October 2025); Proceeds of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17, s 73.16.
6 Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2007-292, s 5.
7 Bill C-12, Strengthening Canada's Immigration System and Borders Act, 1st sess, 45th Pari, 2025 (first reading 8 October 2025).
8 CBC News, Crypto exchange Cryptomus fined record $177M by Canada's financial crime watchdog, October 22, 2025.
9 Supra note 2.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
