From Housekeeping to High Stakes: The Hidden Power of Canada’s Border Bill

Hello, Insight Monitor subscribers! Today, we have a special analysis of new Canadian legislation that came out this week aimed at securing Canada’s borders and tackling illicit finance, organized crime, and fentanyl trafficking. If it seems like that’s a lot for one bill to do, you’re right. So let’s talk about what this bill can and cannot achieve. As always, we appreciate all the shares and subscribers we can get, particularly as we close in on 8k members of our community!

On 3 June 2025, the Government of Canada tabled Bill C-2 in the House of Commons. The Bill, formally known as “An Act respecting certain measures relating to the security of the border between Canada and the United States and respecting other related security measures” (aka the Border Bill) “will strengthen our laws and keep Canadians safe by ensuring law enforcement has the right tools to keep our borders secure, combat transnational organized crime, stop the flow of illegal fentanyl, and crack down on money laundering”.

Photo by Sarah Baxter on Unsplash

The government claims that the Bill will “disrupt illicit financing”:

Do the measures proposed in this bill sound familiar? That’s because most of these were already advertised in the Trudeau government’s fall economic statement last year. I wrote about that here:

Illicit Finance Headlines

Bigger Fines, More Compliance?

There are two main headlines for me. The first is the enhancement of FINTRAC’s administrative monetary penalty regime. FINTRAC, Canada’s financial intelligence unit, is also the regulator for financial entities. These entities (banks, money service businesses like Western Union, and many others) are required to report suspicious and threshold transactions. This includes cash deposits and international wire transfers of $10,000 or more, among other things. When financial entities fail to meet these obligations, FINTRAC has the ability to administer monetary penalties. You will likely remember the recent fines against RBC, CIBC and TD Bank, all of which were over $1 million.

FINTRAC’s penalty regime has been under scrutiny for years because of the small value of its fines. It was hard to argue that compliance fines were a significant incentive to comply with reporting obligations when they topped out at a few million dollars. This might seem like a lot for an individual, but for many financial institutions, it was hardly more than a rounding error, if that.

Under the new proposal, the maximum penalties would be $4 million for individuals and $20 million for entities (an increase from $100,000 for individuals and $500,000 for entities). These violations can be stacked. For instance, TD Bank was fined $9.3 million for five violations (of which there were many instances). I can’t explain exactly how the math works out, but basically, FINTRAC has the ability to issue penalties for each violation and instance of violations.

There are limits to the penalties. For individuals, this is the greater of $4 million and 3% of the person’s gross global income. For entities, this is the greater of $20 million and 3% of the entity’s gross global revenue. So, keeping with our example of TD Bank, it is conceivable that they could have faced far greater fines, limited only by 3% of their 2023 revenues. For reference, 3% of $2.9 billion is $87 million. This is still a far cry from the penalty they faced in the United States, which was $3.1 billion, but is also proportional to their Canadian revenues.

Also interesting is the addition of compliance order violations, which are (as far as I can see) new, and have even bigger penalties than original compliance violations, of $5 million and $30 million for individuals and entities, respectively. This makes sense. Once financial entities are under compliance orders, failure to abide by those orders is serious. The Trudeau government promised us increased criminal liability for serious non-compliance, and this is what I think we get instead of that.

Personally, I’d have preferred more serious criminal liability in these cases. Still, frankly, we have a limited ability to investigate and prosecute criminal non-compliance as it is, so I think this is actually the most feasible way to improve compliance.

Cash Limits, Big Implications

The second impactful amendment, in my view, is the one on cash transactions. While professions and businesses have long been required to report cash transactions of $10k or more, this new legislation will outlaw those transactions in their entirety. Casinos, in particular, will no longer be allowed to accept cash buy-ins of $10,000 or more, which will have the effect of driving cash deposits to financial institutions and entities. The idea here is that these institutions are better able to manage the risk (and reporting) associated with cash transactions of this nature. While this isn’t the part of the Bill that will garner headlines, I believe it is likely to be the most consequential amendment for disrupting illicit financing throughout the entire bill.

Yes, criminals will still have cash, and they will still launder it. But the number of places they are able to do so (particularly through the first stage of money laundering, placement into the financial system) will be limited. This will increase friction for criminals, which is the whole point. If a regime creates enough friction, it reduces profit for criminals.

Housekeeping

There are also a few other amendments that, in my view, are more like housekeeping for our illicit finance regime. These include making sure that information sharing for public-private partnerships is on firmer footing. (Specifically, the Integrated Money Laundering Intelligence Partnership between banks and law enforcement, but the new legislation is drafted to include terrorist financing and sanctions evasion, thus covering all of FINTRAC’s mandate.) FINTRAC will also be able to share disclosures with the Commissioner of Elections Canada, which will help on the foreign interference issue, and was a recommendation I made at the foreign interference commission. There are also other smaller amendments that I think are less impactful but will likely help FINTRAC do its business, such as universal enrolment for reporting entities and having FINTRAC’s Director a member of an OSFI (bank supervisor) committee.

More Amendments, Little Illicit Finance Impact

If you’re reading this and wondering how this will help “combat transnational organized crime, stop the flow of illegal fentanyl, and crack down on money laundering”, you’re not alone. Most of these amendments do very little to move the yardstick on these issues.

And of course, this Bill still has to pass through committees in both the House and the Senate, and survive a vote in the House of Commons. In a minority parliament, that is a challenging task. The opposition could drag out the committee process, and the government will have to find a few members of the House to support the bill. Alternatively, some members of the opposition might be absent from the House that day, thus creating an easy path for the Bill to pass.

Regardless of what happens with the Bill, the big issues preventing meaningful action on organized crime and money laundering remain: an RCMP desperately in need of reform to effectively investigate these crimes, a lack of analytic and investigative capability (mostly in terms of numbers although upskilling is a huge challenge when resources are stretched), and a lack of government prioritization (and resources). Those of you with eagle eyes will see that there’s nothing here on establishing a Canadian Financial Crimes Agency, or fixing the RCMP’s mandate so that they are better able to investigate these issues.

So here we are, with yet another Canadian government paying lip service to combating illicit finance, yet doing very little about it in practice.

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