In the Canadian anti-money laundering system, agents and mandataries are persons or organizations that provide services on behalf of a Money Services Business (MSB). In essence, they are trusted intermediaries authorized to perform customer verification and carry out other compliance functions for the main company.
It is important to understand the difference: an agent is an individual or sole proprietor, whereas a mandatary can be either an individual or a legal entity. As of October 1, 2025, companies subject to the law may use an agent or mandatary to verify corporations and other legal entities on their behalf, which significantly expands their capabilities.
An agent or mandatary may be an individual (for example, a sole proprietor) or an organization (a corporate legal entity). If the agent is a legal entity, the MSB must obtain criminal record checks for the chief executive officer, president, directors, and all persons who directly or indirectly own or control 20% or more of the company; if the agent is an individual (for example, a sole proprietor), a criminal record check for that person is required.
The key point: not everyone can become an agent. Persons with convictions for money laundering, terrorist financing, securities fraud, or tax crimes are automatically deemed ineligible to perform MSB agent functions.
As of October 1, 2025, the rules became stricter. FINTRAC introduced new obligations affecting MSB operations, especially in terms of oversight of agents and verification of beneficial owners. The main innovation: MSBs can now delegate to agents not only the verification of individuals, but also KYC for MSB corporate clients, including corporations, trusts, partnerships, and other structures.
Previously, counterparty verification through FINTRAC was carried out exclusively by the company itself or through agents only for individuals. Now full counterparty verification through FINTRAC is permitted using agents for any type of client, but with one condition: even when the agent performs identity verification, the reporting entity remains fully responsible for identification and record-keeping obligations.
Verification must include criminal record checks for all key persons. For corporate agents, MSBs must obtain checks for the chief executive officer, president, directors, and anyone who owns or controls at least 20% of the company. These documents must be obtained from the competent authority in the person’s country of residence or from an authorized organization within that country.
Criminal record checks must be current (no older than six months). If the document is in a foreign language, a translation into English or French certified by a certified translator is required. This is a significant administrative barrier, especially for companies working with international partners.
Appointing an agent requires a formalized process. The MSB must verify the agent’s eligibility before beginning the relationship and document this process. MSBs must complete this verification before engaging the agent and again within 30 days after the second anniversary of the last verification.
What exactly should be checked? First, the absence of convictions for relevant offenses (money laundering, terrorist financing, fraud). Second, the legality of the agent’s operations in the jurisdiction where it conducts business. Third, whether the agent has its own compliance procedures, if it is a corporation. All of this must be documented and kept on file for audit purposes.
Record-keeping for agents and representatives is not just a formality, but a key safeguard against regulatory sanctions. Records must be retained for at least five years from the date of the last transaction or from the date the relationship with the agent ends.
Verification is conducted before engaging the agent and then repeated within 30 days after every second anniversary of the last check, as long as the agent continues to work. This means cyclical updates of criminal record checks and confirmation of eligibility criteria.
MSBs that hired agents before October 1, 2025, must complete the initial verification by October 1, 2027. This is a transition period giving companies time to adapt. But for new agents hired after October 2025, all requirements apply immediately.
MSB compliance programs must describe how they oversee agents or mandataries. This means it is not enough simply to hire an agent — oversight of their work must be built into the overall risk management system. For example, regular audits of sample client checks, document reconciliation, and training agents on new rules.
MapleBiz experts recommend including the following elements in the compliance program: a description of agent hiring and verification processes, a schedule for periodic checks, communication channels for questions and incidents, and a procedure for terminating the agreement with an agent if violations are identified. This approach minimizes the risk of gaps in the control system.
The main pitfall: by delegating verification to an agent, the company does not transfer responsibility to them. Even when the agent performs identity verification, the reporting entity remains fully responsible for identification and record-keeping obligations. This is a fundamentally important point.
If an agent makes a mistake (for example, accepts a forged document or misses a suspicious client), the regulator will hold the MSB accountable, not the agent. The company must independently assess the quality of the agent’s work rather than blindly trust its conclusions. A dual-check mechanism — where MSB staff selectively recheck agents’ work — is becoming standard practice.
There is another risk: conflict of interest. If an agent works simultaneously with several competing MSBs or conducts similar activities itself, questions of confidentiality and loyalty arise. The written agreement should regulate these aspects.
To comply with the new FINTRAC standards, MSBs need to implement several steps in sequence:
The MapleBiz team specializes in legal support for businesses in Canada, including compliance for companies licensed as MSBs. We understand the challenges money services operators face when implementing new FINTRAC rules.
We offer comprehensive support: developing or auditing a compliance program, preparing template agreements with agents, advising on criminal record check requirements, assisting with communication with the regulator, and training your team. Our goal is to let you focus on growing your business while we handle legal compliance.
By working with MapleBiz, you get not just legal services, but a partner who knows all the nuances of Canadian financial regulation and can help you avoid costly mistakes.
Failure to comply with the requirements is recognized as an offense under the PCMLTFA and is punishable by a fine of up to 250,000 Canadian dollars or imprisonment for up to two years on summary conviction, or a fine of up to 500,000 dollars or imprisonment for up to five years on indictment. This is criminal liability, not just administrative fines.
In addition, FINTRAC has the authority to impose Administrative Monetary Penalties (AMP). Violations are classified by severity — from minor to very serious — with corresponding limits: up to 1,000 dollars for a minor violation, up to 100,000 for a serious one, and up to 500,000 for a very serious violation committed by a legal entity. A violation related to failing to verify an agent’s eligibility or failing to update a criminal record check is classified as serious and is subject to a fine of up to 100,000 dollars for each violation.
In 2025, FINTRAC significantly tightened its enforcement approach. In October 2025, the regulator imposed a record fine of 176.96 million dollars on one MSB for more than 2,590 violations, including failure to file suspicious transaction reports. Another foreign MSB received a fine of 19.5 million dollars. These precedents show the seriousness of the regulator’s intentions.
Beyond financial losses, violations cause reputational damage. FINTRAC publishes information about imposed penalties, including company names, amounts, and the nature of the violations. This deters clients and partners, makes access to bank accounts more difficult, and may lead to the revocation of MSB registration.
It is worth noting that in the first year FINTRAC will focus on education and outreach to support new reporting entities in building compliance programs. But this does not mean leniency — rather, it is a transition period, after which strict enforcement will follow.
When comparing the risks and costs, it becomes clear: investing in a high-quality compliance program and professional legal support pays off many times over. One mistake can cost hundreds of thousands of dollars, whereas preventive measures require significantly smaller investments.
