Introduction
With FINTRAC tightening its regulatory approach and Canada implementing more robust anti-money laundering frameworks, the next two years will be critical for fintechs and Money Services Businesses (MSBs). Businesses must not only maintain a compliant AML program but also prepare for heightened audit scrutiny.
In this article, we break down what triggers an audit, what FINTRAC expects during one, and how your business can prepare proactively—especially ahead of 2026, when increased enforcement and potential legislative reforms are expected.
Why AML Audits Are on the Rise
Recent amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), combined with Canada’s efforts to align with FATF recommendations, have led to an uptick in audits. FINTRAC’s latest reports show a growing focus on virtual currency dealers, foreign-owned MSBs, and fintechs with inadequate transaction monitoring systems.
In 2023 alone, FINTRAC issued more than 30 administrative monetary penalties (AMPs) for non-compliance, some over $1M CAD, primarily targeting businesses with:
- No or outdated AML policies
- Inadequate staff training
- Poor client risk rating and due diligence practices
- Missing or late reports
Common Audit Triggers
FINTRAC audits may be random, risk-based, or triggered by red flags. Here are the top triggers:
| Trigger | Explanation |
| High-volume virtual currency flows | Signals higher AML/CTF risk |
| Changes in ownership or structure | Especially if not reported to FINTRAC within 30 days |
| Customer complaints | Often regarding suspicious account disclosures or irregular transfers |
| Past non-compliance | A history of penalties increases scrutiny |
| Incomplete reporting | Late or missing STRs, LCTRs or TPRs |
FINTRAC Audit Triggers
What to Expect During a FINTRAC Audit
A FINTRAC audit typically involves:
- Pre-Audit Notification You’ll receive a letter requesting specific documents (policies, procedures, risk assessments, training logs, etc.).
- On-Site or Virtual Review FINTRAC may visit your office or conduct a remote review of systems and practices.
- Interviews & Documentation Review Compliance officers, directors, and employees may be interviewed. Transaction monitoring systems and client files will be tested.
- Findings Report After the audit, FINTRAC issues a written report. If deficiencies are found, you may be asked to submit a remediation plan.
- Potential Sanctions Fines or other penalties may follow if non-compliance is material or ongoing.
The AML Audit Checklist (2025 Update)
To prepare for an audit, your MSB or fintech should have the following in place:
✅ A documented and updated risk assessment
✅ AML/CTF compliance policies and procedures
✅ Evidence of staff AML/CTF training (with sign-in sheets or LMS logs)
✅ A named, active Compliance Officer
✅ STR, LCTR, and TPR filing logs
✅ Records of ongoing client due diligence (CDD and EDD)
✅ Documentation of independent program reviews
✅ Business continuity plans for compliance operations
Pro tip: Many audits fail because businesses have a manual in place, but no proof of implementation (e.g., training records, risk rating tools, or internal review outcomes).
FINTRAC’s 2026 Focus: Key Compliance Trends
By 2026, Canadian AML audits will focus on:
- Automation in transaction monitoring
- Beneficial ownership transparency
- Real-time STR and LCTR submissions
- Oversight of third-party tech platforms
- Staff accountability and traceable audit trails
If you’re using third-party software (e.g., for KYC, crypto custody, or payment facilitation), ensure that audit logs and integration records are well documented.
How Instamax Advisory Can Help
We offer:
- AML program design and testing
- Pre-audit simulations
- Compliance officer outsourcing
- Transaction monitoring reviews
- Staff AML/CTF training
- Independent AML audits
- FINTRAC registration assistance for MSBs
Our clients have successfully passed FINTRAC audits with no fines or deficiencies noted—reach out to us to protect your license.
Frequently Asked Questions
Q1: How often does FINTRAC audit MSBs? A: There’s no fixed schedule. Audits are conducted randomly, in response to risk indicators, or as follow-ups to past deficiencies.
Q2: What is the biggest reason MSBs fail an audit? A: Lack of implementation—many businesses have written AML programs but no proof that procedures are followed.
Q3: Can I outsource my AML compliance? A: Yes. Outsourcing is allowed, but ultimate responsibility still lies with the MSB. Your compliance partner must be competent, and your program must still be tailored to your risk.