On November 26, 2025, FINTRAC published updated guidance on the obligations of reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). The update clarifies the definition of politically exposed persons (PEPs) and heads of international organizations (HIOs). Alongside this, FINTRAC released a set of money laundering and terrorist financing (ML/TF) indicators tied to bribery, corruption, and misuse of public office. These developments sharpen due diligence standards for businesses across Canada and have direct implications for risk assessments, client identification procedures, and reporting duties.
Updated Guidance on Politically Exposed Persons and Heads of International Organization
FINTRAC expanded its interpretation of politically exposed persons (PEPs) and heads of international organizations (HIOs) to provide clearer expectations on risk evaluation.
The updated guidance clarifies that PEPs include both domestic and foreign individuals who presently hold, or held within the last five years, high-level public offices. Examples include heads of state or government, judges of high courts, senior military officers, deputy ministers, ambassadors, and municipal leaders such as mayors. Family members and close associates of such individuals also require enhanced scrutiny.
Heads of international organizations (HIOs), for instance leaders of international agencies established by multiple governments, are similarly captured by the rules. Their family members or close associates also fall under the same obligations for a period of five years after they leave office.
The update explains the need for more precise identification, verification, and review procedures for clients who fall into these categories. It also clarifies how these obligations apply to beneficial owners and to transactions conducted on behalf of third parties. Reporting entities, like businesses, must now verify PEP/HIO status at onboarding, on periodic reviews, and whenever new suspicious facts emerge.
New Bribery and Corruption Indicators
The 2025 update adds a detailed catalogue of ML/TF indicators that point to possible bribery, corruption or illicit influence. They serve as red flags when evaluating transactions or client relationships. These indicators draw attention to behavioural patterns, transactional irregularities, and structural features of financial activity that may suggest an attempt to obscure the source or purpose of funds.
Some of the core indicators include:
- Transactions involving public officials or entities where funds flow without clear legitimate purpose, especially payments tied to contracts, licences, permits or state procurement.
- Use of third-party intermediaries or opaque corporate structures, especially where the ultimate beneficial owner lacks transparency or resides in a high-risk jurisdiction.
- Unexplained large cash deposits, followed by rapid wire transfers abroad or across multiple accounts with no clear economic justification.
- Frequent small transactions structured to avoid reporting thresholds or scrutiny.
- Contracts awarded despite weak credentials or inconsistent business history.
- Sudden changes in transactional patterns when a PEP or HIO becomes involved, especially where influence or public office might explain the funds or transfers.
These indicators were introduced to assist reporting entities in identifying patterns that may relate to bribery or influence-peddling.
FINTRAC emphasises that no single indicator confirms illicit activity. However, when an indicator aligns with suspicious facts or context, it may establish “reasonable grounds to suspect” and trigger a reporting obligation.
Revised Expectations for Suspicious Transaction Reports Under the New Guidance
1. Expand Client Risk Classification and Onboarding Procedures
At client onboarding, entities must determine if a client is a PEP, HIO, family member or close associate. The updated guidance extends this obligation beyond financial institutions to all reporting entities under PCMLTFA. Risk assessment must document the person’s status, office held, source of wealth, and expected pattern of transactions.
2. Apply Enhanced Due Diligence and Ongoing Monitoring
Where a client is identified as a PEP or HIO, enhanced due diligence is required. Enhanced measures include verifying source of funds or wealth, obtaining additional documentation, and applying heightened scrutiny to large or unusual transactions. Monitoring must remain active for at least five years after the person leaves office or ceases the PEP/HIO status.
3. Integrate New ML/TF Indicators in Transaction Screening
All transactions must be screened against the new list of bribery and corruption indicators. When one or more indicators align with facts or context, entities must assess whether there are “reasonable grounds to suspect.” In such cases a Suspicious Transaction Report (STR) must be filed without delay.
4. Update Internal Policies, Training and Record-Keeping Protocols
Internal compliance policies must be revised to reflect the new guidance. Staff training should cover the definition of PEP/HIO, the significance of new indicators, and the procedural obligations for reporting. Records, including determinations, source-of-funds verification, transaction reviews and STR submissions, must be retained for at least five years.
Why These Updates Matter
These changes mark a tightening of anti–money laundering (AML) and anti–corruption standards in Canada. The inclusion of non-traditional sectors under PEP/HIO obligations and the expansion of bribery and corruption indicators reflect global efforts against illicit financial flows. Reporting entities now face greater responsibility when handling clients with public-office backgrounds or ownership structures that obscure beneficial ownership.
Compliance failures may result in administrative penalties, reputational damage, or criminal investigation. Early adaptation therefore serves both legal compliance and risk management objectives.
Required Adjustments for Compliance Programs
Businesses subject to the Act must now incorporate the updated guidance into their risk assessments. This includes reviewing existing controls, updating internal procedures, and assigning responsibility for enhanced due diligence in higher-risk cases. Business entities need to update their training programs to include the new bribery and corruption indicators and outline the expanded screening duties for PEPs. Enhancing record-keeping systems to ensure that decisions are traceable and consistent across operations is also necessary.
It is also essential to confirm that monitoring tools capture transactions that can reveal corruption exposure. Reviews should also be done to confirm that staff can identify red flags and escalate concerns promptly.
Conclusion
The November 2025 guidance from FINTRAC significantly expands the obligations of regulated businesses under Canada’s AML and anti-corruption framework. The broadened definition of PEPs and HIOs, coupled with detailed bribery and corruption indicators, demands enhanced due diligence, vigilant record-keeping, and active transaction monitoring. Entities that adapt their compliance programs in response will be better positioned to meet legal obligations and avoid regulatory risks.