As of October 1, 2025, expanded reporting obligations came into force for companies providing money transfer services (Money Services Business, MSB). These changes affected not only MSBs, but also insurance companies working with title insurance, real estate professionals, and operators of private ATMs. However, for MSBs the innovations are especially significant — they concern reporting on sanctioned property and enhanced oversight of agents.
From now on, reporting entities are required to submit to FINTRAC a Listed Person or Entity Property Report (LPEPR) when disclosure of information to the Royal Canadian Mounted Police or the Canadian Security Intelligence Service is required under the Special Economic Measures Act (SEMA) or the Justice for Victims of Corrupt Foreign Officials Act (the Sergei Magnitsky Act). This means that sanctions screening of MSB clients must be carried out regularly, systematically, and using up-to-date lists of sanctioned persons.
This innovation expands the scope of LPEPR obligations introduced earlier — as of March 2, 2025 — for disclosures under the UN Act and the Criminal Code. In essence, the legislator is gradually expanding the categories of sanctioned property subject to mandatory disclosure.
Risks for MSBs when dealing with sanctions have increased many times over. Non-compliance is now classified 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 by a fine of up to 500,000 dollars or imprisonment for up to five years on indictment. This measure is intended to increase business accountability for compliance with sanctions legislation.
The Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act (the Magnitsky Act) are two separate instruments of Canada’s sanctions policy, differing in their purposes and in the list of persons subject to restrictions.
SEMA applies to states that pose a threat to international peace and security. The Magnitsky Act is used against persons involved in gross human rights violations or corruption. Both mechanisms provide for asset freezes, transaction prohibitions, and property disclosure.
For MSBs, it is important to understand that reporting obligations apply under both sanctions regimes. This means that monitoring must be carried out across all current sanctions lists, including the UN, Magnitsky Act, and SEMA lists. Ignoring this requirement creates a risk of regulatory inspection and subsequent serious financial penalties.
Property is defined as anything owned or controlled by a person or organization, whether tangible or intangible. This broad definition covers not only bank accounts and cash, but also digital assets, real estate rights, vehicles, equipment, shares, debt instruments, and even works of art.
In practice, this means that MSBs must check not only clients’ financial transactions, but also any assets that may be linked to sanctioned persons. For example, if a client attempts to transfer funds to purchase real estate owned by a company controlled by a sanctioned person, such a transaction falls under disclosure obligations.
One of the most complex aspects of the new sanctions regime is the deemed ownership rule. If a sanctioned person controls a legal entity, any property owned by that legal entity or controlled by it directly or indirectly is deemed to belong to the sanctioned person.
Control is determined by three criteria: the person directly or indirectly owns 50% or more of the shares or ownership interests, or 50% or more of the voting rights; the person is able directly or indirectly to change the composition or powers of the board of directors; or it is reasonable to conclude that the person is able directly or indirectly by any means to direct the activities of the legal entity.
The third criterion is especially broad and creates an area of uncertainty. Even a minority shareholder with veto rights over key matters or the ability to appoint one director could theoretically be deemed a controlling person. This concept of control is broader than in most of Canada’s allied jurisdictions. For MSBs, this means that in-depth due diligence on beneficial owners and clients’ control structures is necessary.
The obligation to file an LPEPR arises whenever disclosure is required under Canadian sanctions legislation. The triggers vary depending on the specific sanctions regime, but the common factor is the ownership or control of property by a sanctioned person.
The key difference between the LPEPR and other reports filed with FINTRAC is that filing does not require a transaction or attempted transaction — the mere existence of property, such as a bank account, owned or controlled by a terrorist group, sanctioned person, or entity is sufficient.
Important: if the obligation to file an LPEPR has arisen and there are reasonable grounds to suspect that it is related to money laundering, terrorist financing, or a sanctions violation, both an LPEPR and a suspicious transaction report (STR) must be filed. This means dual reporting in the event of suspicion.
FINTRAC inspections and sanctions violations have become a priority area of supervision. The regulator actively uses LPEPR data to identify sanctions evasion schemes and verify companies’ compliance with their obligations.
Reporting entities must integrate LPEPR procedures into their compliance programs and retain reports in accordance with FINTRAC’s five-year record retention requirement. This means that MSBs are required not only to file the report, but also to keep all supporting documentation for five years from the date of filing.
Reporting entities must promptly disclose information about the presence of such property in their possession or control, and the frequency of subsequent reporting has changed from monthly to quarterly. This eases the administrative burden on business, but does not reduce responsibility for the initial disclosure.
For filing an LPEPR, FINTRAC has provided special forms and guidance. MSBs must ensure that their internal procedures comply with the requirements for completing these forms and that staff are trained to correctly identify sanctioned property.
The amount of fines for non-compliance with reporting requirements for sanctioned property is significant and depends on the severity of the violation. As already noted, the fine may reach 500,000 Canadian dollars or five years’ imprisonment on indictment.
In addition to criminal sanctions, FINTRAC has the authority to impose administrative monetary penalties (AMPs). These sanctions are civil rather than criminal, but they may be made public and entail serious business consequences. Fines for failing to file suspicious transaction reports (STRs) may reach 100,000 dollars for individuals and 500,000 dollars for companies.
In October 2025, FINTRAC imposed a record fine of 176.96 million dollars on an MSB, citing more than 2,590 violations, including failure to file suspicious transaction reports related to darknet markets, child sexual abuse material trafficking, ransomware, and sanctions evasion. Previously, another foreign MSB was fined 19.5 million dollars.
These precedents show that the era of symbolic fines is over. The regulator intends to punish serious violations harshly, especially those related to organized crime, terrorist financing, or sanctions evasion.
MapleBiz specialists understand the complexity of the new requirements and their impact on the day-to-day operations of MSBs. Our team provides comprehensive legal support in sanctions compliance, including:
Working with MapleBiz not only helps reduce the risk of fines and criminal prosecution, but also builds a resilient compliance system that protects your business’s reputation and ensures confidence in the legality of operations.
To ensure full compliance with the new requirements, MSBs are advised to take the following steps:
The new reporting obligations for sanctioned property are not a temporary measure, but a long-term trend toward tighter oversight. Canada seeks to align with FATF international standards and is increasing the responsibility of financial organizations for compliance with sanctions regimes. MSBs that proactively adapt to the new requirements gain a competitive advantage, strengthen the trust of clients and regulators, and protect themselves from significant financial and reputational risks.
The MapleBiz team is ready to become your reliable partner in this process, providing practical solutions based on a deep understanding of Canadian law and regulatory practice. Contact us today to ensure your MSB is fully compliant with the new requirements and avoid serious sanctions.
