Canada’s anti–money laundering (AML) regime has a credibility problem—not because AML enforcement is unnecessary, but because the penalty outcomes are increasingly hard to defend as proportionate.
A six-figure administrative monetary penalty (AMP) can be appropriate when a business is willfully blind, repeatedly non-compliant, or effectively operating as a conduit for laundering. But when penalties land in the same range for first-time, technical, and disputed compliance judgments, the system starts punishing paperwork like it’s organized crime—and it risks undermining the very compliance culture FINTRAC claims to promote.
The $150,000 problem: a blunt number in a thin-margin world
In real estate, and increasingly in mortgage brokerage and private lending, FINTRAC’s enforcement approach is colliding with economic reality. Most brokerages and many mortgage shops are not banks. They are small and mid-sized businesses with fluctuating deal flow, limited compliance staffing, and margins that can be far thinner than outsiders assume. A $150,000 penalty is not a “cost of doing business.” For many firms, it’s a year of profit—or more.
That matters because Canada’s AML statute and FINTRAC’s own policy say the AMP program is meant to encourage compliance rather than punish. If a penalty predictably destabilizes a business—shrinking its capacity to invest in training, systems, and professional compliance support—the penalty becomes counterproductive. You don’t build AML resilience by wiping out the compliant middle of the market.
A concrete example: Century 21 Heritage and the “should have been earlier” penalty
This isn’t theoretical. Two days before another widely discussed six-figure penalty, FINTRAC posted a $148,912.50 AMP against Century 21 Heritage Group Ltd., an Ontario brokerage, that is now under appeal at the Federal Court.
Century 21 Heritage’s managing partner, Eryn Richardson, stated to Real Estate Magazine that a suspicious transaction report (STR) was filed, but FINTRAC determined it should have been filed earlier based on FINTRAC’s interpretation of risk indicators. FINTRAC’s notice points to multiple red flags around the transaction, such as a foreign buyer from a high-risk jurisdiction, rapid changes of control between related parties, and links to an industry regulators say could be used as a venue for sexual exploitation and human trafficking.
Richardson disputes the penalty as failing to reflect the circumstances, emphasizing that a report was filed and that no criminal activity was identified.
Whatever one thinks of the underlying risk factors, this fact pattern crystallizes the core problem: there is a meaningful difference between failing to report and reporting later than FINTRAC believes you should have reported. That difference matters for culpability, for harm, and for what “encouraging compliance” is supposed to mean. When a timing dispute collapses into the same ~$150,000 range as far more serious misconduct, the AMP regime starts to look less like calibrated behaviour change and more like strict liability with a cash register.
The fairness gap: banks can absorb millions; brokerages can’t absorb thousands
The proportionality issue becomes unavoidable when you compare how FINTRAC penalties land across the market.
Big banks have paid multi-million-dollar FINTRAC penalties that, while headline-grabbing, are typically immaterialcompared to annual profits:
- RBC: ~$7.48 million against ~$15 billion net income (about 0.05%).
- TD: ~$9.185 million against ~$12 billion net income (about 0.08%).
Those figures may be “large” in absolute dollars, but economically they behave like compliance overhead. Meanwhile, a $150,000 penalty imposed on a real estate brokerage, mortgage brokerage, or smaller lender can be existential—especially if it arrives early in a compliance journey, on a first examination, over a narrow issue.
FINTRAC’s model is officially “harm-based” rather than “size-based.” In practice, that can produce the worst of both worlds: too small to deter the biggest institutions and too large to survive for the smallest ones.
The public optics are terrible—and they matter
Penalty systems don’t just punish; they signal what society values. That’s why it is so damaging when Canadians see large corporations receiving modest fines for conduct that looks, to the public, more blameworthy than a compliance timing dispute.
The recent example that has resonated widely is the Superstore/Loblaw case reported by CBC: a $10,000 fine for marketing imported food as Canadian. Whatever the legal category, the optics are simple: a dominant corporate actor can commit consumer-facing deception and face a fine that’s effectively petty cash, while a smaller regulated business can face a $150,000 AML penalty for a disputed view of when a report should have been filed.
It’s not hard to understand why business owners then ask: how is it that some corporations engaged in deliberate fraud or dishonest conduct can be fined less than $150,000, while a small brokerage can be hit with a penalty in that range for a compliance misstep—sometimes on a first audit?
A regime that looks arbitrary will eventually be treated as arbitrary. That is not how you get better compliance.
“You must comply” is true—but the regulator must also be practical
To be clear: real estate, mortgage brokering, and private lending cannot be carved out of AML obligations. Criminals do not respect professional titles, and smaller firms can be exploited. The idea that compliance should be optional for small entities is a non-starter.
But there is a difference between a system that insists on compliance and one that makes compliance workable.
Industry frustration is often as much about process as it is about penalties. FINTRAC is frequently viewed as a large, bureaucratic organization with inconsistent engagement: firms report that it can take months—sometimes up to nine months—for responses to inquiries. If regulated entities struggle to get timely, practical guidance, and then face six-figure penalties for interpretive or timing issues, enforcement starts to feel less like oversight and more like gotcha.
What peer jurisdictions get right: proportionality isn’t “soft”—it’s effective
Canada is not the first country to wrestle with proportionality in AML enforcement, but peer systems show clearer mechanisms for fairness:
- United Kingdom (FCA): fines are explicitly tied to relevant revenue, with formal hardship relief. The framework is built to ensure penalties are meaningful to large firms and not automatically business-ending to smaller ones.
- United States (FinCEN): although statutory maximums can be one-size on paper, U.S. regulators commonly use a spectrum of outcomes—warnings, remediation, supervisory actions—reserving major penalties for systemic or willful failures.
- Australia (AUSTRAC): maximum penalties are severe, but major outcomes are typically court-mediated and contextual, and regulators frequently use enforceable undertakings and remediation pathways rather than jumping straight to headline fines for fixable issues.
These systems are not perfect. But they share a recognition that if you want compliance, you need graduated enforcement that distinguishes between (1) willful or repeated misconduct and (2) fixable deficiencies.
The practical reset Canada needs: warn, remediate, escalate
If Canada wants a regime that is tough on laundering and fair to legitimate businesses, the solution isn’t complicated. FINTRAC should apply a disciplined enforcement ladder—especially for first examinations and narrow issues:
- Warning + mandatory remediation plan for first-time, technical, or interpretation-based issues (including timing disputes where a report was ultimately filed).
- Short-interval follow-up with clear, written expectations.
- Escalating penalties only for repeat non-compliance, refusal to remediate, concealment, or evidence of willful blindness.
That approach still deters bad actors. But it stops treating an honest compliance learning curve as moral culpability.
Bottom line: $150,000 for a first-audit timing dispute is a category error
FINTRAC’s mandate is important. But a penalty regime that regularly produces ~$150,000 outcomes for small and mid-sized brokerages—particularly where the dispute is that an STR should have been filed earlier—risks losing legitimacy. It makes enforcement look untethered from intent, history, and practical impact. And it creates the perverse outcome where the businesses most willing to comply are the ones most likely to be financially damaged by the system.
Canada does not need weaker AML rules. It needs practical rules, enforced with proportion, predictability, and real engagement—so we can target laundering without crushing the legitimate economy that’s being asked to help stop it.