Reporting on anti-money laundering, anti-terrorist financing and sanctions

Who is OSFI?

The Office of the Superintendent of Financial Institutions (OSFI) is Canada’s prudential regulator and supervisor of most banks, federal insurance companies, and trust and loans companies. Its role is to determine whether they are in sound financial condition. OSFI also regulates and supervises federally regulated private pension plans to determine whether they meet their minimum funding requirements.

Who is FINTRAC?

FINTRAC is Canada's financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor. The Centre helps to combat money laundering, terrorist activity financing, sanctions evasion and threats to the security of Canada.

What does OSFI do?

OSFI is an independent agency of the Government of Canada, established to protect depositors, policyholders, financial institution creditors, and pension plan members, while allowing financial institutions to compete and take reasonable risks.

OSFI’s overarching mandate is to contribute to public confidence in the Canadian financial system by:

• fostering sound risk management and governance practices through a regulatory framework designed to control and manage risk
• supervising and intervening early if there are material deficiencies, and taking corrective measures, or requiring that institutions act to address the situation
• monitoring and evaluating system-wide or sectoral developments that may have a negative impact on the financial condition of federally regulated financial institutions
• balancing the rights and interests of depositors, policyholders, financial institution creditors, and pension plan beneficiaries, while allowing financial institutions to compete effectively and take reasonable risks

In 2023, OSFI’s mandate was expanded to include ensuring that financial institutions have appropriate policies in place to protect themselves from threats to their integrity and security, including foreign interference.

Prudential regulation and supervision have traditionally focused on financial elements, such as capital and liquidity. Over the last few years, OSFI has focused on non-financial elements, such as technology and cyber, and culture risks. This change recognizes that inadequate mitigation of non-financial risks, just like financial risks, can have prudential consequences. 

What does FINTRAC do?

FINTRAC ensures the compliance of thousands of businesses with requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), including financial entities, securities dealers, life insurance companies, brokers and agents, casinos, money services businesses, and real estate brokers and sales representatives, among others.

With this mandate, FINTRAC is the primary agency responsible for conducting anti-money laundering and anti-terrorist financing assessments of federally regulated financial institutions and ensuring their compliance with the PCMLTFA.

Businesses subject to the PCMLTFA are required to establish a compliance program, identify clients, keep records and report certain types of financial transactions to FINTRAC, including international electronic funds transfers, large cash transactions, large virtual currency transactions, casino disbursements and suspicious transactions.

FINTRAC applies a risk-based approach to ensuring the compliance of businesses subject to the PCMLTFA, including:

• Monitoring and assessing the quality, timeliness and volume of financial transaction reporting
• Undertaking hundreds of supervisory activities every year, including examinations and follow-up examinations
• Enforcing action plans in cases of non-compliance
• Issuing administrative monetary penalties
• Disclosing cases of non-compliance to law enforcement for criminal investigation

Compliance with the PCMLTFA helps deter criminals, terrorist financiers and sanctions evaders from using Canada's financial system for illicit purposes. It also ensures that FINTRAC receives the information that it needs to produce financial intelligence to assist in the investigation and prosecution of money laundering, terrorist activity financing, sanctions evasion and threats to the security of Canada.

FINTRAC analyzes the reporting it receives from businesses, as well as the information it receives from law enforcement, government departments and agencies, foreign financial intelligence units and members of the public, to determine whether a disclosure of tactical financial intelligence is required to recipients listed in the Act.

How does OSFI work with the Financial Transactions and Reports Analysis Centre (FINTRAC)?

FINTRAC’s sharing financial intelligence and regulatory compliance information is important to OSFI given its new expanded mandate.

When a financial institution fails to meet its regulatory compliance requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, it could indicate weakness in an institution’s risk control environment or corporate culture.

Based on this information, OSFI will undertake supervisory examinations to verify that the institution is adhering to the appropriate regulatory guidelines, as money laundering has a direct impact on the security and integrity of a financial institution, prudential considerations are elevated.

OSFI’s high risk tolerance for early intervention means that we will respond proactively to address where risks could jeopardize the public's confidence in the soundness and integrity of the Canadian financial system, including vulnerabilities associated with money laundering.