In business practice, conformity and supervisory interaction issues contain compulsory accounting for changes in financial services demands and interaction with financial operations system. One such change is entry into force of updated demands from Financial Transactions and Reports Analysis Centre of Canada on 1 October 2025.
New provisions expand obligations of number of companies in terms of combating money laundering, terrorist financing and conformity with rules on openness of legal person ownership. These alterations are relevant to wide range of market participants, including financial intermediaries, insurance firms and other organisations subject to FINTRAC procedures.
FINTRAC is Canadian financial intelligence agency that generates records and transmits data to law enforcement and national services to combat money laundering, terrorist financing and sanctions evasion. Regulator collects and analyses material from “informing entities” included in list of those required to file reports and identify customers. System is designed to reduce risks of illegal capital flows and strengthen stability of financial environment.
New demands will apply to wider range of entities and operations. Their purpose is to eliminate identified risks in financial operations and close regulatory loopholes that could be used to evade control or conceal sources of funds. These are part of already modernised conformity framework that is gradually being implemented.
Several key changes will come into effect on 1 October that companies subject to FINTRAC regulations need to take into account.
One of key innovations is obligation of reporting entities to report discrepancies in material about beneficial owners. If data collected by organisation differs significantly from information in federal register of beneficial owners, such “material discrepancy” must be reported to Canada Corporations Registry. This provision aims to strengthen control over corporate structure and ownership transparency.
Another aspect is expansion of scope of operations and entities required to conduct identification, record-keeping and reporting. New rules provide for clearer demands for verifying identity of customers through agents and authorised parties, including mandatory documentary confirmation and periodic review of such checks. This applies to both individuals and corporate structures.
Another change concerns current identification and reporting obligations in real estate segment. Now, in real estate transactions, including those involving unrepresented parties, brokers, agents and other participants are required to verify identities and keep records of relevant data. This closes previous gaps that could have created risks for non-transparent transactions.
Updated regulations also strengthen registration and conformity obligations for entities that were not previously considered reportable. These include transaction processing service providers, providers of private access automated banking machine services, and companies occupied in title insurance for real estate transactions.
These organisations are required to register with FINTRAC, establish internal control programmes, comply with know-your-customer requirements, maintain necessary records, and inform suspicious transactions.
| Area | Previous Requirement | New Requirement (Effective Oct 1, 2025) | Who Is Affected | Action Required |
| Beneficial Ownership | Identification based mainly on ownership thresholds | Enhanced verification of control in fact and ownership structure | Corporations, trusts, MSBs, financial institutions | Update KYC procedures and ownership assessments |
| Compliance Program | Periodic reviews | More frequent and documented effectiveness assessments | All reporting entities | Review and update compliance program |
| Suspicious Transactions | Reporting based on reasonable grounds | Expanded indicators and documentation expectations | All reporting entities | Update internal reporting and staff training |
| Recordkeeping | Standard retention | Expanded scope and detail of records | All reporting entities | Adjust recordkeeping systems |
| Risk Assessment | General risk-based approach | More detailed and entity-specific risk assessments | High-risk sectors | Reassess enterprise-wide AML risk |
| Penalties & Enforcement | AMPs applied selectively | Increased enforcement focus and transparency | Non-compliant entities | Ensure readiness before Oct 1, 2025 |
Implementation of new FINTRAC demands involves review of current conformity practices. Firms subject to current rules must guarantee that their accounting, informing and customer verification systems are ready. This includes:
Special attention should be paid to mechanisms for interacting with register of beneficial owners. In order to identify and report “material discrepancies” in timely manner, companies are required to incorporate stage of comparing internal data with federal register data into their accounting processes.
Documentation and its storage are equally important. Compliance programmes must clearly record data sources, verification methods, audit results, and actions taken to correct identified issues. This will not only guarantee conformity with regulatory requirements, but also reduce risk of claims from auditors and inspectors.
Due to non-compliance, authorities have tightened sanctions. Failure to comply with obligations to verify identity of consumers, register, maintain records and submit mandatory notifications usually results in administrative fines. In some cases, criminal penalties are imposed. These include heavy fines and other measures of accountability. Firms should be aware of such risks and adapt their processes in timely manner to minimize legal and financial consequences.
New FINTRAC demands, which come into effect on 1 October 2025, entail significant expansion of compliance regime for wide range of reporting entities. They are generally aimed at strengthening know-your-customer practices, enhancing control over corporate ownership and increasing openness of financial flows. Organizations need to assess impact on their operations in detail, promptly implement necessary changes to processes and systems, and study updated regulations. Adaptation processes should take into account technical and organizational measures for sustainable conformity with controller’s demands.
Informing entities in Canada are compulsory to present following three core records to FINTRAC:
Canadian AML legislation requires reporting entities to:
As of recent reforms, entities must also assess control in fact, not only ownership percentage.
Yes. FINTRAC compliance is mandatory for all entities covered by Proceeds of Crime and Terrorist Financing Act.
Failure to comply can result in:
Key FINTRAC informing threshold is CAD 10,000: