The Government of Canada took a significant step to strengthen its financial transparency regime by publishing new regulations on March 26, 2025, under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The amendments, released in the Canada Gazette, Part II, expand the scope of the Act to cover new sectors and enable greater information sharing among entities subject to the law.

Penalties for noncompliance will be formally integrated into the Act, with violations classified according to their severity. Offenses will be categorized as minor, serious or very serious, each carrying a corresponding range of monetary penalties.

For the first time, factoring companies, cheque cashers, and financing and leasing entities will be subject to anti-money-laundering (AML) and counter-terrorist financing (CTF) obligations.

According to the Regulatory Impact Analysis Statement (RIAS) accompanying the amendments, the changes will affect a broad spectrum of stakeholders:

• 25,497 existing reporting entities such as financial institutions, accountants, money services businesses, real estate brokers, life insurers, security dealers, casinos, and notaries in British Columbia;
• 865 newly captured entities in the factoring, financing and leasing, and check-cashing sectors; and
• 272,060 carriers, importers, exporters, and customs service providers.

In expanding its AML regime, Ottawa is signaling a sharper focus on enforcement and inter-agency cooperation in the fight against financial crime.

Laying the groundwork

Canada’s latest push to tighten its AML regime is not happening in a vacuum. It follows mounting concern over transactional crime and the increasing sophistication of illicit financial flows.

In its 2023-24 annual report, Safe Canadians, Secure Economy, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) described the steps the regulator is taking to protect investors.

The agency processed nearly 300,000 financial intelligence disclosures, drawing from close to a million individual transactions. Feedback from domestic law enforcement and security agencies was resoundingly positive – 92% reported that the information contained new, actionable insights.

This regulatory shift also reflects a broader convergence between financial compliance and public safety.

A directive issued by the Prime Minister in February 2025, prompted by the rise of transactional organized crime and the escalating fentanyl crisis, called for urgent, coordinated action. In response to that, while the core content of the amendments remains largely unchanged from their draft form, the implementation timeline has been significantly accelerated.

New obligations for new players

A key feature of the latest regulatory package is the formal extension of AML and CTF obligations to previously unregulated sectors: factoring companies, cheque-cashing businesses, and financing and leasing entities.

Initially slated for later in the year, the amendments relating to trade-based financial crime will now come into force on April 1, 2025, six months ahead of schedule.

The accelerated timeline reflects the urgency of addressing vulnerabilities exploited by illicit actors in less-regulated corners of the financial ecosystem. But for hundreds of new entities now caught by these obligations, it also means a compressed window for compliance.

To ease the transition, regulators have committed to a collaborative approach.

The RIAS emphasizes that authorities will support affected businesses as they adapt to their new reporting and due diligence responsibilities. FINAC, in particular, plans to engage proactively with these sectors through targeted guidance, education, and outreach efforts in the year ahead.

The goal is not only compliance, but also cultivating a shared understanding of how these businesses can contribute to the broader fight against financial crime.

Beneficial ownership information

Beginning October 1, 2025, businesses subject to the Act will face a new layer of responsibility aimed at improving beneficial ownership transparency. Under the amended regulations, entities will be required to report material discrepancies between their own records and information contained in the federal beneficial ownership registry maintained by Corporations Canada.

This is not an entirely new concept for Canadian reporting entities, who are already required to obtain and verify beneficial ownership information as part of costumer due diligence. What changes, however, is the requirement to actively address or report discrepancies to authorities.

Entities will have 30 days to resolve or formally report any material mismatch they detect. While minor issues, such as typographical errors or slight variations in address, will not trigger this obligation, more significant inconsistencies, such as missing beneficial owners or conflicting ownership structures, will demand immediate attention.

Interestingly, Canada’s regulatory tightening comes as the United States takes a notable step in the opposite direction. On March 2, 2025, FinCEN issued an interim final rule eliminating the obligation for US companies and individuals to report beneficial ownership information under the Corporate Transparency Act.

In effect, Canada is filling the transparency gap lefts by its southern neighbor, positioning itself as a jurisdiction intent on reinforcing corporate ownership accountability at time when others are loosening it.

Balancing disclosure and privacy

In a significant shift, businesses subject to the Act will now be permitted to share information with one another to better detect and prevent money laundering, terrorist financing, and sanctions evasion. This marks a move toward a more collaborative, intelligence-led approach to financial crime prevention, allowing reporting entities to pool insights and spot red flags that might otherwise go unnoticed.

However, this new flexibility comes with a crucial safeguard: businesses must first design a code of practice detailing how and under what condition they will disclose personal information. This code must be reviewed by FINTRAC and approved by the Office of the Privacy Commissioner of Canada.

This effort reflects a classic dilemma in financial regulation: how to balance the legitimate need for documentation, information exchange, and archiving against the risk of misuse of personal data.

Around the world, concerns about data being weaponized for authoritarian surveillance have raised alarms, particularly in regimes where financial intelligence is used less for compliance and more for control.

Canada’s approach seeks to avoid these pitfalls by embedding privacy oversight directly into the compliance system. A co-creative model, where private-sector actors help shape practical, privacy-focused disclosure practices in close dialogue with regulators, could offer a template for reconciling privacy rights with the operational realities of detecting financial crime.