Banking in Canada: How to navigate the new AML roadmap?

Canada’s anti-money laundering and counter-terrorist financing (AML/CFT) landscape is undergoing its most significant transformation in decades. Between the establishment of the Canada Financial Crimes Agency (CFCA) and sweeping amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), financial institutions are facing a “perfect storm” of regulatory change.

This shift is occurring against a backdrop of global geopolitical uncertainty and the arrival of Real-Time Rails (RTR) in 2026. This infrastructure will demand that detection move at the speed of instant payments – a major challenge given that Canada is currently the only G20 country without such a system in place. 

In a webinar hosted by ComplyAdvantage about banking in Canada, industry experts shared hands-on tips for navigating this new era.

Preparing for major regulatory shifts in Canada

The Canadian government is moving from consultation to enforcement with several key initiatives designed to close regulatory loopholes. A primary pillar of this change is the establishment of the CFCA, a dedicated authority designed to support investigations, prosecutions, and asset recovery linked to criminal activity.

“From speaking with industry colleagues over the past couple of years, this certainly seems like a step in the right direction. Hopefully, the establishment of this agency will really go a long way towards making sure that the resources are all aligned… and that both sides are working towards the common goal.”

Andrew Oakden, Chief Compliance Officer at HomeEquity Bank

Beyond the creation of new agencies, the regulatory perimeter is expanding to include non-traditional participants:

• New oversight for real estate: Thousands of mortgage brokers and lenders are now being brought under The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) oversight. They are now required to implement full AML programs similar to those of major banks.
• Transparency requirements: While the operational complexities of establishing beneficial ownership remain a hurdle, the trend is moving toward public registries. As Andrew Oakden noted, “You don’t need very many holes [in the sieve]” for bad actors to get through; public data is essential to closing those gaps.
• High-stakes compliance: Canada remains a prime target for illicit flows. In the session, Denisse Rudich, Director at Rudich Advisory & CCO & Co-Founder of ElementaryB, reminded that Canada is a “destination country” due to its stable currency and appreciating property values, which often attracts bad actors. 

FINTRAC’s compliance checklist for the mortgage sector

For mortgage brokers, lenders, and brokerages newly under FINTRAC oversight, your AML program must now include these core elements:

• Compliance Officer: Appoint a dedicated individual to oversee the program.
• Written policies: Develop and maintain up-to-date, written compliance policies and procedures.
• Risk assessment: Document a thorough assessment of your business’s vulnerability to money laundering and terrorist financing.
• Training program: Implement a comprehensive written training program for employees and agents to ensure they can identify and report suspicious activity.
• Reporting: Establish systems to identify and report suspicious transactions (STRs) to FINTRAC and maintain required records.
• Two-year reviews: Commit to a review of your compliance program every two years to test its effectiveness.

How to implement an innovative AML Program

Building an effective program requires a symbiosis between advanced technology and human expertise. Findings from the State of Financial Crime 2024 show that 65% of Canadian financial institutions (FIs) struggle with a lack of accuracy and comprehensive quality data to inform detection and investigation.

In the webinar, Andrew Davies emphasized that as Canada adopts the RTR, monitoring must evolve:

“Right now, there are 79 real-time payment infrastructures around the world. Which means that financial crime monitoring and detection needs to be real-time as well… uncovering nefarious activity needs to move at the speed of these financial services.”

Andrew Davies, Global Head of Head of FCC Strategy at ComplyAdvantage

To build an innovative AML program, FIs should focus on:

• AI-driven explainability: Utilizing machine learning that provides natural language versions of why a model flagged an activity. This helps analysts and regulators understand the decision-making process beyond a simple “black box” notification.
• Detection of predicate crimes: Shifting the focus from just “laundering” to the underlying acts. Denisse Rudich noted that Canada is unique in recognizing types like “pollution crime” and “ideologically motivated extremism” within its national risk assessments.
• Human training: Equipping staff to recognize “telltale signs” of fraud. Andrew Oakden noted that while a firm might not yet have a “belief” of crime, they must train staff to recognize the Reasonable Grounds to Suspect (RGS) threshold.

Looking at challenges and opportunities ahead

As RTRs are implemented, FIs must shift to real-time payment infrastructures and cross-border collaboration to comply with the new AML roadmap. While the introduction of ISO 20022 is an opportunity to include richer data in transactions – improving the mitigation of risks like sanctions evasion – Crime-as-a-Service (CaaS) remains a global threat.

Criminals are increasingly using AI and open-source code for social engineering, meaning the “battlefield” has moved:

“Traditionally, if you were going to get robbed, you’d be robbed on the street. Whereas now the threat landscape in the financial crime space is your own private space; it can be on your phone, it can be on your laptop, or on your social media. The boundary between your private space and a criminal act has been removed.” 

Denisse Rudich, Director at Rudich Advisory & CCO & Co-Founder of ElementaryB

Firms must move beyond simple regulatory box-ticking and embrace a moral imperative to protect the vulnerable. By using the vast amounts of data available today to “fight fire with fire,” Canadian institutions can turn regulatory challenges into opportunities for greater financial security.