What Bill C-2 means for financial institutions: Key changes to Canada’s anti-money laundering regime

On June 3, 2025, Bill C-2, also known as the Strong Borders Act, was tabled in Parliament, bringing with it sweeping changes to Canada’s anti-money laundering (“AML“) framework. These proposed amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA“) aim to strengthen Canada’s efforts against money laundering and terrorist financing by introducing more stringent compliance requirements, significantly higher penalties, and enhanced regulatory oversight. For institutions in the financial sector, this means stricter obligations, including mandatory enrolment with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC“) and the risk of increased fines for non-compliance. This article delves into the key changes proposed by Bill C-2 and what financial institutions need to know to stay ahead of the evolving compliance landscape.

1. Expansion of the enrolment requirement with FINTRAC

Under the current AML regime, money service businesses are the only entities that are required to enroll with FINTRAC.

Bill C-2 extends the mandatory enrolment requirement with FINTRAC to all persons and entities that are subject to the PCMLTFA,[1] also referred to as ‘reporting entities.’ Such reporting entities are outlined in Section 5 of the PCMLTFA and include banks, credit unions, life insurance companies, mortgage lenders, financing and leasing entities, securities dealers and casinos.[2] Consequently, all reporting entities will be subject to enrolment renewal obligations, additional reporting requirements and consequences for failure of enrolment.

Furthermore, the proposed amendments would allow FINTRAC to revoke or deny the enrolment of a person or entity that has not paid a penalty within 30 days after the day on which all proceedings in respect of the concerned violation ended. This power would also extend to any person or entity that is in a prescribed relationship with such a person or entity.[3]

2. Increased monetary penalties  

Bill C-2 proposes to increase the maximum administrative monetary penalties (the “AMPs“) applicable to reporting entities for certain violations by 40 times the current amounts across all classes of violations. Below is a table summarizing the current maximum AMPs per violation class and the proposed maximum increased AMPs.

In addition, the maximum penalty for certain prescribed violations would increase from CA$100,000 to CA$4,000,000 for individuals and from CA$500,000 to CA$20,000,000 for entities.[6]

On a cumulative basis, AMPs will be capped at the greater of CA$4,000,000 and 3% of an individual’s gross global income in the preceding year. In the case of an entity, AMPs will be capped at the greater of CA$20,000,000 and 3% of the entity’s gross global revenue of its global corporate group in the preceding year.[7] However, Bill C-2 also introduces the ability to pay as a factor in determining the amount of the penalty.[8]  

Bill C-2 also proposes significant increases to criminal fines, with the maximum fine reaching CA$20,000,000.[9]

3. Enhanced compliance program standards

Under the current regime, compliance programs must be “intended to ensure compliance.”[10] Bill C-2 proposes to heightenthe standard applicable to compliance programs such that they must be “reasonably designed, risk-based and effective.”[11] A violation of such requirement would be classified as a “very serious” violation[12] and would therefore warrant the imposition of the highest maximum AMPs.

Bill C-2 also proposes to expand the list of “very serious” violations to non-compliance with numerous compliance program requirements, including appointing a compliance officer, developing written compliance policies and procedures, developing and maintaining a written ongoing compliance training program for employees, agents, mandataries and other persons, as well as instituting and documenting a plan for an effectiveness-based review of their compliance program.[13]

Bill C-2 also requires persons or entities having committed prescribed violations and faced AMPs to enter into a compliance agreement with FINTRAC, which is only discretionary under the current regime. In the case of a refusal to enter into a compliance agreement or failure to comply with one, the director of FINTRAC must issue a compliance order and the violation of such compliance order would be introduced as a standalone offence.[14] Failure to comply with a compliance order would be punishable, in the case of a person, by a penalty of the greater of $5,000,000 and 3% of the person’s gross global income in the year before the one in which the penalty is imposed, and in the case of an entity, the greater of $30,000,000 and 3% of the entity’s gross global revenue in its financial year before the one in which the penalty is imposed.[15]

To further strengthen compliance efforts, the proposed amendments expand FINTRAC’s powers to examine the records and inquire into the business and affairs of persons and entities beyond reporting entities to any person or entity that it believes on reasonable grounds to be a reporting entity.[16]

4. Cash-related restrictions on transactions

Bill C-2 makes it an offence for any person or entity engaged in a business, a profession or the solicitation of charitable financial donations from the public to accept a cash payment, donation or deposit of CA$10,000 or more in a single transaction or in a prescribed series of related transactions that total CA$10,000 or more. This prohibition would expand beyond reporting entities but certain financial sector entities would be exempted, such as banks, credit unions, trust companies, loan companies and other entities exempted by regulation.[17] The violation of such offence can lead to AMPs for reporting entities and to a fine of up to three times the amount of the payment, donation or deposit accepted, if convicted on indictment.

Bill C-2 also imposes prohibitions on certain reporting entities, including financial institutions, from accepting cash deposits into an account from a depositor who is not the holder of the account or authorized to give instructions on that account.[18]  

5. Anonymous accounts prohibited

The prohibition imposed on reporting entities from opening accounts for clients whose identity cannot be verified would also be extended to opening anonymous accounts for clients whose name is fictitious.[19] 

6. Enhanced information sharing framework

With the aim of preventing money laundering activity, enhancing AML enforcement and allowing quicker detection of violations, Bill C-2 proposes numerous amendments to the PCMLTFA and other acts to allow information sharing between public and private sectors.

Part 12 of Bill C-2 amends the Office of the Superintendent of Financial Institutions Act in order to appoint the Director of FINTRAC as a member of the Financial Institutions Supervisory Committee (the “FISC”).[20] Through an amendment to the PCMLTFA, Bill C-2 enables the Director to exchange information with the other members of FISC, including the Governor of the Bank of Canada, the Commissioner of the Financial Consumer Agency of Canada, the Superintendent of Financial Institutions, the Chief Executive Officer of the Canada Deposit Insurance Corporation and the Deputy Minister of Finance.

Bill C-2 also authorizes FINTRAC to disclose certain information to the Commissioner of Canada Elections, subject to certain conditions, if it has reasonable grounds to suspect that the information is relevant to investigating or prosecuting an offence or violation under the Canada Elections Act or an attempt to commit such an offence or violation.[21]

Finally, Bill C-2 also sets forth amendments to the information sharing provisions of the PCMLTFA. The proposed amendments would allow a reporting entity to collect an individual’s personal information to provide to law enforcement for the purposes of detecting or deterring money laundering, terrorist activity financing, sanctions evasion or for another “consistent” purpose. This collection could occur without an individual’s knowledge or consent, if the disclosure with knowledge or consent would compromise the ability to detect or deter money laundering, terrorist activity financing or sanctions evasion.[22]

Key takeaways

Overall, Bill C-2 enhances FINTRAC’s authority by expanding the scope of mandatory enrolment and significantly increases fines to strengthen deterrence and compliance efforts. The legislation also introduces stricter compliance standards, limits the use of cash, bans anonymous accounts, and promotes proactive information sharing to more effectively identify and prevent money laundering activities.

The proposed amendments outlined above illustrate how Bill C-2 could significantly transform Canada’s AML regime, should the relevant provisions be enacted. Financial institutions will need to align with more stringent compliance requirements—potentially driving up compliance costs and undoubtedly increasing their exposure to regulatory risk. Miller Thomson’s Financial Services Group will continue to monitor Bill C-2’s impacts on Canada’s AML regime and will provide updates when available. Should you have any questions regarding this topic, please do not hesitate to contact a member of Miller Thomson’s Financial Services Group.  

[1] Section 87 of Bill C-2.

[2] Section 5 of the PCMLTFA.

[3] Section 87 of Bill C-2.

[4] Section 5 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

[5] Section 124 of Bill C-2.

[6] Section 100 of Bill C-2.

[7] Section 100 of Bill C-2.

[8] Section 101 of Bill C-2.

[9] Section 111 of Bill C-2.

[10] Section 9.6 of the PCMLTFA.

[11] Section 84 of Bill C-2.

[12] Section 125 of Bill C-2.

[13] Section 126 of Bill C-2.

[14] Section 105 of Bill C-2.

[15] Section 105 of Bill C-2.

[16] Section 96 of Bill C-2.

[17] Section 136 of Bill C-2.

[18] Section 135 of Bill C-2.

[19] Section 83 of Bill C-2.

[20] Section 143 of Bill C-2.

[21] Section 94 of Bill C-2.

[22] Section 196 of Bill C-2.