Canada bars $10,000+ cash payments and tightens enforcement as FATF review deadline nears
Canada has introduced legislation that would ban businesses from accepting cash payments of $10,000 or more, unless they are financial institutions, in a move intended to curb money laundering and strengthen anti-financial-crime enforcement.
The Globe and Mail reported that the changes form part of a broader overhaul of Canada’s financial-crime laws and come ahead of a scheduled review by the Financial Action Task Force (FATF) this fall.
The FATF, an intergovernmental body, evaluates countries’ efforts to prevent money laundering and terrorist financing.
Failure to meet its standards can lead to grey-listing, which may deter foreign investment.
According to Jessica Davis, president of advisory firm Insight Threat Intelligence, the cash restriction aims to make it harder for criminals to insert illicit funds into the financial system, a process known as placement.
“You can’t do a $10,000 cash buy into the casino any more. If you have $10,000 in cash and you want to take it to a casino, you have to take it to a bank first,” Davis said in a report done by The Globe and Mail.
The bank would then need to transmit the funds—such as through a wire transfer—to the casino.
“Will this stop money laundering? Of course not,” Davis said.
He added that the placement stage will shift to financial institutions, which are better positioned to detect it “because they’re going to have the full client history.”
The legislation also introduces increases to administrative monetary penalties (AMPs) for breaches of anti-money-laundering (AML) obligations.
Individuals could face maximum fines of $4m, while entities could be penalised up to $20m.
According to The Globe and Mail, these changes were first signalled in the federal government’s fall economic statement prior to the April election.
Suhuyini Abudulai, a financial services lawyer at Borden Ladner Gervais, said that regulators are increasing their public communication.
“You’ve certainly seen in the last few years more public communication from FinTRAC with respect to their AMP activities and enforcement,” she said.
She added that Canadian enforcement culture differs from the US, noting that “there may be some flexibility” in how certain violations are handled, and that discussions with the regulator may occur before any monetary penalty is issued.
Recent enforcement actions have raised the stakes.
In May, FinTRAC imposed a record $9.2m penalty on Toronto-Dominion Bank for anti-money-laundering compliance failures.
In late 2023, Canadian Imperial Bank of Commerce and Royal Bank of Canada were also fined.
In the US, Toronto-Dominion Bank paid more than US$3bn in penalties and accepted non-monetary sanctions after pleading guilty to conspiracy to commit money laundering.
The legislation, part of a broader border security bill tabled Tuesday by Prime Minister Mark Carney’s Liberal government, arrives amid pressure from the United States.
US President Donald Trump previously claimed that Canada had not done enough to stem illegal crossings and fentanyl trafficking.
“There is a spotlight because we have the FATF review, but now there’s more of a spotlight because of the new US administration that is very focused on their mandate on cross-border financial crime and the impact of money laundering,” Abudulai said in the same The Globe and Mail report.
Alana Scotchmer, financial services regulation partner at Gowling WLG, said the proposed changes would need to be implemented swiftly to be taken into account during the FATF evaluation.
“Now that we are on the eve of the next evaluation, making a lot of these changes and cleaning up a lot of the things that need to be cleaned up is a more urgent exercise,” she said.
Scotchmer questioned how FinTRAC’s expanded enforcement powers would be applied. “I am interested to see… how FinTRAC actually uses these powers that it’s being given,” she said.
She added that it remains to be seen whether the additional tools will result in more or different enforcement activities.
Ottawa’s move mirrors similar developments globally.
The European Union recently implemented a $15,600 cap on cash payments to impede criminal activity.
