FINTRAC Expense Assessment Regulations

Summary#

The government published a proposed set of rules called the Financial Transactions and Reports Analysis Centre of Canada Assessment of Expenses Regulations. If adopted, they would set how the Financial Transactions and Reports Analysis Centre of Canada (the Centre, also known as FINTRAC) divides and charges its operating expenses to banks and other reporting entities. This is a proposal open for comments for 30 days from the publication date February 18, 2023.

What it does#

• Names which costs the Centre can recover as “prescribed expenses” tied to its work under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
• Lists which groups can be charged:
  • All banks covered by the Bank Act and authorized foreign banks.
  • All life insurance companies covered by the Insurance Companies Act.
  • All trust and loan companies covered by the Trust and Loan Companies Act.
  • Any other person or entity that made 500 or more “specified reports” to the Centre in the relevant fiscal year.
• Sets how each affected entity’s share of costs is calculated:
  • Every bank/large entity gets a base charge based on the value of its assets in Canada. The rule sets tiers (for example, assets ≥ $1 trillion = base $250,000; assets ≥ $500 billion but < $1 trillion = base $200,000; down to assets < $10 million = base $5,000). Those base amounts are adjusted by the Consumer Price Index (indexing uses 2024 as the reference year).
  • After base amounts are taken out of the Centre’s annual expenses, the remaining costs are divided using formulas that rely on:
    • the number of “specified reports” made by entities, and
    • each bank’s share of total bank assets (for banks), or each reporter’s share of reports (for non-banks).
  • Entities that already paid interim assessments during the year get those amounts deducted from their final charge.
• Says any assessment must be given in writing.
• States the regulations would come into force when section 170 of the Budget Implementation Act, 2021, No. 1 comes into force (or on registration if that happens later).

Who's affected#

• Banks (as defined under the Bank Act) and authorized foreign banks.
• Life insurance companies under the Insurance Companies Act.
• Trust and loan companies under the Trust and Loan Companies Act.
• Other businesses or organizations that filed 500 or more specified reports to the Centre in a fiscal year (these are certain reports required under the anti-money‑laundering rules).
• Smaller reporters that file fewer than 500 specified reports would generally not be charged the proportional fee under these rules (the regulation makes the proportional amount nil for them).

Why it matters#

• The rules decide who pays for FINTRAC’s work and how much they pay. That affects the budgets of big banks and other heavy reporters.
• Costs may be passed on to customers indirectly (for example through fees or pricing changes), especially from large financial institutions.
• The formulas combine company size and reporting activity, so both a bank’s asset size and how many reports an entity submits matter to its bill.
• This is a proposed regulation, not final law. The public had 30 days from February 18, 2023 to send comments.