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Canada is stepping up enforcement against financial misconduct, proposing tougher penalties for banks like TD that fail in compliance.

What does this mean?

Following TD Bank's hefty $3.09 billion US fine for failing anti-money laundering protocols, Canada is taking significant measures to strengthen its regulatory framework. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act may see amendments that could increase penalties for financial crimes by up to 40 times. This legislative push strengthens FINTRAC's ability to collaborate with other federal bodies and aims to address gaps identified in the 2016 FATF review. These changes are timely, as Canada prepares for the FATF evaluation scheduled for 2025-2026. The largest penalty to date, a C$9.2 million fine for TD Bank, sets a new compliance standard, alongside penalties for CIBC and RBC.

With Canada's tougher penalties, financial institutions must prepare for a stricter compliance environment. The proposed cap of C$20 million per corporate violation shows a no-tolerance approach to AML breaches. As banks bolster their protocols, industries connected to financial services may experience policy and practice shifts, potentially affecting investor confidence.

The bigger picture: Setting a global standard in financial security.

Canada's regulatory enhancements aim to curb domestic financial crimes and align the nation with global counter-financial crime standards before its FATF evaluation. By addressing past criticisms and reinforcing FINTRAC's role, Canada strengthens its position on the international stage. These reforms could ignite a trend of heightened financial scrutiny worldwide, influencing global compliance standards.