Financial crime and sanctions law: 2024 in review and looking ahead

Federal government continues to list/designate new individuals and entities

Through 2024, the Government of Canada continued to list new individuals and entities on Canada’s sanctions lists. The government continues to rely primarily on the Special Economic Measures Act (SEMA), Canada’s primary autonomous sanctions legislation, to impose economic sanctions.¹ Over the last few months the SEMA regulations were amended to target new individuals and entities, including in Russia, Belarus, Ukraine, Haiti, Iran, Venezuela, Myanmar, Sudan and China.

SEMA regulations continue to be amended quietly, quickly, and generally with retroactive effect.  

In addition, the government’s online consolidated lists are not always up to date and the “deemed ownership” rule (which came into force in 2023) means an entity could be deemed sanctioned without itself being listed in SEMA regulations or on the consolidated list. 

As sanctions become more complex, limited guidance was issued but further clarity is needed

In March 2024, Global Affairs Canada (GAC) released guidance on the application of Canadian economic sanctions.² The trade bar had been advocating intensely for guidance, and the release of any interpretive guidance was welcomed. 

However, the guidance provided little by way of insight except confirming that GAC takes a broad interpretation of the criminal sanctions provisions. For more information about GAC’s guidance, see our publication “Too little too late?”.

On February 4, 2025, the Canadian Bar Association passed Resolution 25-02-A calling on the Minister of Foreign Affairs to provide comprehensive guidance on interpreting and applying economic sanctions and take other steps to provide greater transparency and predictability in applying economic sanctions.³

We hope to see the government release more guidance, as the US Office of Foreign Assets Control and the UK Office of Financial Sanctions Implementation continue to provide more guidance to their regulatees. 

Changes to strengthen sanctions enforcement, particularly through Canada’s anti-money laundering and customs regimes

The Government of Canada’s latest efforts to update its sanctions regime has been to target sanctions evasion through changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the Criminal Code.⁴ These amendments will add a series of new enforcement considerations to the sanctions landscape. Some of the more significant changes include: 

• A new “sanctions evasion” offence under the PCMLTFA: This expands the requirement for “reporting entities” (defined in the PCMLTFA⁵) to report suspicious transactions to FINTRAC, to include suspected efforts to evade sanctions laws.⁶ FINTRAC has updated its guidance to reflect the change. A failure to report either attempted or completed suspicious transactions can lead to significant fines or imprisonment. This change came into force on August 19, 2024.

• New customs enforcement mechanisms to combat sanctions evasion: Bill C-59 imposes new requirements on importers and exporters through the PCMLTFA to “declare” to a Canada Border Services Agency (CBSA) customs officer whether goods being imported/exported are connected to sanctions evasion. It also includes new search and seizure powers for the CBSA in cases of suspected sanctions evasion.⁷ These changes are not yet in force.

• A lower prosecutorial burden for money laundering tied to sanctions evasion and strengthened investigative powers: Section 462.31 of the Criminal Code was amended to lower the mens rea requirement for the offence of laundering proceeds of crime.⁸ The mens rea can be inferred where the court is satisfied the accused dealt with the property or its proceeds in a “markedly unusual way” or where the accused’s dealings are “inconsistent with the lawful activities typical of the sector in which they take place.” 

This could have significant implications for sanctions enforcement as the offence extends to property or proceeds derived through violations of Canada’s sanctions legislation. The amendments make it easier to obtain search warrants and production orders for investigations into potential offences related to proceeds of crime and digital assets.⁹ These changes came into force on September 18, 2024.

• Increased authority for FINTRAC to share information with other regulatory and law enforcement bodies: Forthcoming amendments will allow FINTRAC to disclose information related to investigating or prosecuting a money laundering, terrorist financing, or sanctions evasion offence with the police, CRA, CSE, and the Competition Bureau, among regulatory bodies. FINTRAC will also be given, once these amendments come into force, the authority to share information with foreign states if there is an agreement to do so. 

Bill C-59 reflects the federal government’s ongoing efforts to better align Canada’s anti-money laundering, customs, and sanctions enforcement regimes. It is a significant legislative package, though some of its components, such as the customs enforcement changes, have yet to come into force. 

Expansion of anti-money laundering and anti-terrorist financing (AML/ATF) laws

In addition to sanctions-specific changes, the Government of Canada has made numerous amendments to the PCMLTFA, regulations made under the PCMLTFA, the Canada Business Corporations Act, and the Criminal Code to generally broaden the scope of application of Canadian AML/ATF laws, including:

• Establishing a beneficial ownership registry: The Canada Business Corporations Act requires Canadian businesses file beneficial ownership information with Corporations Canada. This information is publicly available, and incorporated into new Canadian AML/ATF reporting requirements.
• Expanding the scope of the PCMLTFA: The PCMLTFA applies to designated “reporting entities.” The Government of Canada has increased the scope of reporting entities to include businesses involved in transporting currency or negotiable instruments, financing or leasing entities, and non-financial institution mortgage lenders.
• Designating certain transnational criminal organizations as terrorist entities under the Criminal Code: The use of Criminal Code provisions to designate certain cartels as terrorist entities provides law enforcement with more tools to prosecute terrorist offences, including terrorist financing, to combat the cartels. 

2024 Fall Economic Statement signals new sanctions and anti-money laundering legislation

On December 16, 2024, the Government of Canada released its Fall Economic Statement (2024 FES). The 2024 FES highlighted sanctions and anti-money laundering legislative changes that the government intends to introduce. 

First, the government is proposing to amend SEMA to introduce a “charge” on the windfall profits of seized assets (i.e., primarily seized assets from Russian-sanctioned persons) held by federally regulated financial institutions. The intent is to use the interest generated by frozen financial assets to service loans made to Ukraine.¹⁰

Second, the 2024 FES indicates the AML/ATF framework will continue to be expanded. Given the new use of the existing AML/ATF system to now target sanctions evasion, this will impact compliance with the Canadian sanctions regime. Among the announced changes are expanding the application of the AML/ATF framework to capture more service providers, creating a new taskforce for law enforcement and the financial sector to target money laundering schemes, and expanding information-sharing powers for regulators.

Third, the 2024 FES also imposes stronger penalties for financial crimes. Administrative monetary penalties will increase, with maximum penalties of up to $20 million for corporations.¹¹

Finally, the amendments will require the Minister of Finance to be consulted on implementing any economic sanctions that could have a negative impact on the country’s financial system.¹²

While enforcement efforts have lagged, 2025 may bring a greater focus on sanctions enforcement by policing and regulatory authorities

Canada has not historically taken an aggressive position in enforcing its sanctions program. We are not aware of any reports of Canada having laid any criminal charges for sanctions offences since Russia’s full-scale invasion of Ukraine in 2022. 

However, increased sanctions enforcement appears likely. For example, the CBSA recently detained shipments over suspected sanctions violations, as well as cargo suspected of being products of forced labour.¹³ Canadian regulatory inaction may be the result of regulators feeling unable to investigate and prosecute sanctions offences (see our 2021 publication on a failed conviction under the sanctions against Syria). If that is the case, the changes made through Bill C-59 may result in increased enforcement. Canadian businesses should review their due diligence and compliance policies and practices, their supply chains and partners, and adjust as may be required.

We may see the remaining amendments in Bill C-59 implemented at some point in 2025.¹⁴ 

With the changes made through Bill C-59, the federal government may be signalling its intention to put a greater focus on sanctions enforcement. Whatever happens, Canadian companies must ensure their compliance policies and practices are up to date with the ever-changing regulatory landscape both in Canada and abroad.

The authors would like to thank Ian Chesney, articling student, for his contribution to preparing this article.