How can your dealership comply with FINTRAC’s anti-money laundering requirements?

What steps can your business take to comply with FINTRAC?

These are the key elements that your dealership needs to include when setting up and maintaining an AML compliance framework that meets the regulatory requirements:

1. Appoint a compliance officer

The first step is to identify the individual who will be accountable for your AML compliance program. The responsibilities of a compliance officer include developing policies and procedures, training employees, and implementing the tools needed to comply with the regulations.

Your compliance officer should also have a comprehensive understanding of your dealership’s operations and AML regulations, and the capacity to remain up to date with changing legislation and guidance. This ensures they have the knowledge to understand how legislation will impact your business and can leverage the right resources to ensure your dealership is compliant.

2. Perform and document a risk analysis

The regulations require a risk-based approach. This means your dealership needs to understand its AML risks and invest in the proper measures to mitigate those risks and ensure compliance.

3. Develop written policies and procedures

The next step is to develop policies and procedures that provide a clear roadmap of how the people, processes, and systems in your dealership will work together to comply with the AML regulations and manage the dealership’s AML risks. This involves collecting and verifying information about a client, including their identity and beneficial ownership, and performing ongoing monitoring.

4. Establish a training program

After you have developed written policies and procedures, it is necessary to develop a training program for all staff and agents to ensure they understand the AML program and their role in its success.

5. Ongoing review, maintenance, and monitoring

The regulations require your dealership to keep its AML program updated on an ongoing basis and to have it reviewed every two years, which can be supported by an internal audit department or external firm. This is required — however, it also helps ensure your business has the right program in place and remains up to date with evolving risks in the sector.

What are the penalties for non-compliance?

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), is Canada’s regulator that oversees AML issues. FINTRAC has the authority to issue both financial penalties and criminal charges for instances of non-compliance.

Financial penalties vary by degree of importance, with violations categorized as minor, serious, and very serious and range from $1,000 for a minor violation to $500,000 for a very serious violation. Additionally, FINTRAC has the power to publicly name reporting entities on its website that are issued penalties for AML compliance deficiencies. Severe or repeated non-compliance may cause reputational damages to your dealership. 

Take the next steps

It is crucial to establish an effective AML compliance program to comply with FINTRAC’s requirements by the April 1, 2025, deadline. Contact MNP’s Anti-Money Laundering Services team for advice or assistance on creating an AML compliance program for your dealership.