More than 900 businesses, including cheque cashers, are being targeted by FINTRAC’s new regulatory requirements. You will now be facing stricter compliance rules, greater banking challenges, and extensive regulatory attention.
These actions may have you wondering why FINTRAC is targeting cheque-cashing firms. That’s why we’ll break down all the reasons behind this recent focus in today’s post.
The Role Of FINTRAC For Cheque Cashers
FINTRAC is a financial intelligence unit in Canada concerned with detecting and preventing money crimes such as:
- Money Laundering
- Terrorist Financing
It analyses financial transaction details to ensure FINTRAC reporting entities, such as cheque cashers, comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
Cheque cashing firms are now classified as money service businesses (MSB) by this regulatory organization. If you’re a cheque casher in Canada, your business must now comply with FINTRAC’s rules.
When MSBs fail to comply, they pose a major risk not just to themselves but to the entire financial ecosystem.
Why Is FINTRAC Targeting Cheque Cashers Now?
FINTRAC reporting entities have been facing scrutiny for various reasons. Cheque cashers have also become a target of oversight lately. Let’s look at the key factors that will explain why FINTRAC is targeting cheque cashers:
- Cheque-Cashing Firms Pose A High Risk For Financial Crimes
Cheque-cashing businesses handle high volumes of cash without the client verification rules that apply to traditional financial firms. This makes them attractive targets for criminals engaging in money laundering through:
- Fraudulent cheques
- Identity fraud
- Structure transactions
FINTRAC’s focus on cheque cashers is an attempt to close these vulnerabilities and ensure that firms are actively mitigating their exposure to financial crimes.
- Cheque Cashers Have Greater Non-Compliance Issues
FINTRAC has found through audits and examinations that a cheque cashing MSBs struggle to meet basic compliance requirements. Common issues include:
- Poorly documented FINTRAC MSB compliance program
- No proper measures to verify client identities
- Failure to meet FINTRAC reporting requirements
- Lack of transaction records for FINTRAC large cash transaction
This historical pattern has pushed FINTRAC to increase oversight on the cheque cashing sector to drive up compliance standards.
- Pressure To Meet International Standards
Canada is a member of the Financial Action Task Force (FATF), the global standard-setter for anti-money laundering and counter-terrorist financing (AML/CTF) regulations.
One of the main reasons why FINTRAC is targeting cheque cashers now is to align its compliance goals with FATF’s standards. Repeated evaluations by the international agency have proven weaknesses in Canada’s MSB sector oversight.
By enhancing its compliance strictness for cheque cashers, the country can maintain its international reputation.
- Increased Pressure By Bank Of Canada
Banks are wary of maintaining relationships with cheque-cashing businesses precisely because of the regulatory risks involved. FINTRAC’s focus on MSBs serves a dual purpose:
- Protecting the banking sector from reputational and regulatory fallout
- Ensuring that MSBs don’t "fly under the radar" when banks de-risk them
Even if your cheque cashing MSB is fully compliant, you are part of a sector that banks and regulators see as high risk. That’s why it’s more critical to show robust compliance for maintaining your banking relations.
What Is Expected From FINTRAC Reporting Entities Like Cheque Cashers?
FINTRAC's expectations from cheque cashers are higher than ever. You are required to comply the new law on cash deposits Canada and more by:
- MSB Registration
All cheque cashers are now classified as money service businesses in Canada. You must register your firm with FINTRAC before cashing cheques for clients. Once your MSB license expires, you must renew it to keep offering financial services.
- Written Compliance Program
A well-detailed written FINTRAC MSB compliance program is a requirement for cheque cashers. Your business must include the following things in the document:
- AML policies and procedures
- A documented risk assessment report
- Details of the appointed compliance officer for your cheque-cashing firm
- Ongoing training methods for staff
- A two-year independent compliance review
Meeting AML compliance requirements and KYC obligations is critical for cheque cashers in Canada.
- Know Your Client (KYC) Requirements
Proper client identification and verification is essential, especially when:
- Cashing cheques of more than $3,000
- Cashing suspicious cheques such as cheques of high values to same recipient often
- Cashing cheques to virtual currency
If your cheque cashing MSB cannot verify client identities using FINTRAC’s methods, you may face various penalties.
What Are Consequences Do FINTRAC Cheque Cashers Face For Non-Compliance?
Cheque cashers can face multiple consequences for FINTRAC non-compliance such as:
- Administrative Monetary Penalties (AMPs): Fines ranging from a few thousand to hundreds of thousands of dollars.
- Public Naming: Your business could be publicly named and shamed for MSB non-compliance.
- Bank Account Closure: Banks may terminate your accounts, making it nearly impossible to continue operating.
- Criminal Charges: In extreme cases, non-compliance can lead to criminal investigations and charges.
Beyond the financial costs, the reputational damage can be fatal to your business.
How You Can Protect Your Cheque-Cashing Business With Reno Co. & Fintech
Proactive FINTRAC MSB compliance is the only safe strategy. Here’s how we help our clients stay ahead:
- Cheque Casher MSB RegistrationÂ
We ensure your MSB registration is properly filed, accurate, and maintained, minimizing the risk of regulatory delay or rejection.
- Building And Maintaining A Compliance Program
We help you develop a custom compliance program tailored to your specific operations, risk exposure, and banking relationships.
- Bank Relationship Management
We work with you to present a strong compliance posture to your banking partners, helping you preserve critical financial services access.
- Ongoing FINTRAC MSB Compliance Support
Regulations evolve with your business in Canada. We offer continuous MSB compliance support to help you adapt to regulatory changes and business growth.
Compliance Is No Longer Optional For Cheque Cashers: Benefit From Renno Co. & Fintech’s Expertise Today
If you operate a cheque-cashing firm in Canada, the reality is clear: you are on FINTRAC’s radar. Instead of waiting for audits by the organization, you need to start implementing internal compliance policies.
Our firm specializes in helping cheque cashers like you stay compliant, avoid penalties, and preserve your essential banking relationships.
Reach out to us today to schedule a compliance consultation. Your future depends on it.
