Financial statements of the
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
and independent auditors’ report thereon

For the year ended March 31, 2025

Statement of management responsibility including internal control over financial reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2025, and all information contained in these statements rests with the management of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgement, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of FINTRAC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in FINTRAC’s Departmental Results Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Actand other applicable legislation, regulations, authorities, and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout FINTRAC and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments. A risk-based assessment of the system of ICFR for the year ended March 31, 2025 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in Annex A.

The firm of Welch LLP has expressed an opinion on the fair presentation of the financial statements of FINTRAC, which does not include an audit opinion on the annual assessment of the effectiveness of the organization's internal controls over financial reporting.

Contractual obligations (note 10)

The accompanying notes form an integral part of these financial statements.

Segmented information (note 12)

The accompanying notes form an integral part of these financial statements.

The accompanying notes form an integral part of these financial statements.

The accompanying notes form an integral part of these financial statements.

Notes to the financial statements
For the year ended March 31

1. Authority and objectives

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) was legislated into existence in July 2000 to be Canada’s Financial Intelligence Unit. The Centre exists to assist in the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control. FINTRAC’s Financial Intelligence and Compliance programs strive to disrupt the ability of criminals and terrorist groups that seek to abuse Canada’s financial system and to reduce the profit incentive of crime.

FINTRAC acts at arm’s length and is independent from the law enforcement agencies and other entities to which it is authorized to disclose financial intelligence. It reports to the Minister of Finance, who is in turn accountable to Parliament for the activities of the Centre. FINTRAC was established by, and operates within, the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations.

To effectively pursue its mandate, FINTRAC aims to achieve the following strategic outcome: A Canadian financial system resistant to money laundering and terrorist financing.

2. New revenue authority and legislative change

Effective April 1, 2024, amendments to the PCMLTFA and the introduction of the Financial Transactions and Reports Analysis Centre of Canada Assessment of Expenses Regulations enable FINTRAC to recover the annual cost of its Compliance program from the prescribed reporting entities it regulates. Annually, FINTRAC will determine the total cost of carrying out its Compliance activities during the preceding fiscal year and assess that amount against reporting entities in accordance with the methodology set out in the regulations.

This revenue is classified as non-exchange revenue under Public Sector Accounting Standards (PSAS) Section PS 3400 – Revenue, and is recognized when the authority to collect has been established and the amount is measurable and collectible.

The implementation of this new revenue stream did not result in a restatement of prior year figures, as it became effective in the current fiscal year.

3. Summary of significant accounting policies

These financial statements have been prepared using FINTRAC's accounting policies stated below, which are based on Canadian Public Sector Accounting Standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Parliamentary authorities and revenue spending authority

FINTRAC is financed by the Government of Canada through Parliamentary authorities and statutory authorities. Included in the statutory appropriation is a revenue-spending authority, which allows FINTRAC to spend assessment revenue. Financial reporting of authorities provided to FINTRAC do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament.

Note 4 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2024–2025 Departmental Plan. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2023–2024 Departmental Plan.

(b) Net cash provided by Government of Canada

FINTRAC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by FINTRAC is deposited to the CRF, and all cash disbursements made by FINTRAC are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

(c) Amounts due from or to the CRF

Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that FINTRAC is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

FINTRAC has two sources of revenues: Assessment Fees and Administrative Monetary Penalties (AMPs), which are subject to different revenue recognition policies.

Assessment fees

FINTRAC recognizes assessment revenue so as to recover expenses in support of the Compliance program. Any amounts that have been billed for which costs have not been incurred are classified as unearned assessments on the Statement of Financial Position. Revenue is recorded in the accounting period in which it is earned (services provided) whether or not it has been billed or collected. At March 31 of each year, amounts may have been collected in advance of the incurrence of costs or provision of services, alternatively, amounts may not have been collected and are owed to FINTRAC.

Assessment revenue is recognized based on actual costs incurred. The assessments are charged to recover costs and all costs are considered recoverable. Assessments are billed annually based on an estimate of the current fiscal year’s costs of operations together with an adjustment for any differences between the previous year’s assessed costs and actual. The assessment process is undertaken before December 31 in each year, in accordance with subsections 51.1 to 51.4 of the PCMLTFA.

Administrative monetary penalties

FINTRAC has the legislative authority to issue Administrative Monetary Penalties (AMPs) to Reporting Entities (RE) that are in non-compliance with Canada’s PCMLTFA. AMPs and related interest charges are treated as a source of non-respendable revenue and not available to discharge FINTRAC’s liabilities. While the Director is expected to maintain accounting control, they have no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the entity’s gross revenues.

This type of revenue is recognized as a “non-exchange transaction”, where FINTRAC receives cash consideration for which the payor does not receive any goods or services in return. These are also deemed “involuntary” because the right to the economic resource is attributable to the PCMLTFA to enforce laws and regulations (PS 3400.03). As such, FINTRAC recognizes revenue when a RE is not in compliance with the Act and they have been notified via Notice of Violation (NOV). The amount recorded in the financial statement is its realizable value along with applicable interest.

(e) Expenses

Expenses are recorded on the accrual basis:

• Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
• Services provided without charge by other government departments for employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

• Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government. FINTRAC’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. FINTRAC’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
• Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using actual data put together by the Pay and Compensation sector at FINTRAC.
• The accrued liability related to sick leave benefits is recognized in the financial statements of the Government of Canada and is not reported in these financial statements under Treasury Board accounting policies for Government departments.

(g) Financial instruments

A contract establishing a financial instrument creates, at its inception, rights, and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. The Department recognizes a financial instrument when it becomes a party to a financial instrument contract.

Financial instruments consist of accounts and loans receivable, and accounts payable and accrued liabilities.

All financial assets and liabilities are recorded at cost or amortized cost. Any associated transaction costs are added to the carrying value upon initial recognition. For financial instruments measured at amortized cost, the effective interest method is used to determine interest revenue or expense.

See Note 13 Risk Management for risks related to the Department’s financial instruments.

(h) Non-financial assets

The costs of acquiring buildings, equipment and other capital property are capitalized as tangible capital assets and are amortized to expense over the estimated useful lives of the assets, as described in Note 9. All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.

(i) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense is recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(j) Transactions involving foreign currencies

Transactions involving foreign currencies are converted into Canadian dollar equivalents using rates of exchange in effect at the time of the transactions.

(k) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues, and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, the liability for employee future benefits and the useful life of tangible capital assets.

Actual results could significantly differ from those estimated. Management’s estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

(l) Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

4. Parliamentary authorities

FINTRAC is financed by the Government of Canada through Parliamentary authorities and statutory authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statements of Financial Position in one year may be funded through parliamentary and/or statutory authorities in prior, current or future years. Accordingly, FINTRAC has different net results of operations for the year on a Government funding basis. The differences are reconciled in the following tables:

5. Accounts payable and accrued liabilities

6. Unearned assessment revenue

Unearned assessment revenue represents the amount of assessments collected during the year that exceeds the actual expenditures incurred for FINTRAC's Compliance program. The following table presents details of FINTRAC's unearned assessment revenue:

7. Employee future benefits

(a) Pension benefits

FINTRAC’s employees participate in the public service pension plan (the “Plan”), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and FINTRAC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2013, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2024–25 expense amounts to $7,240,438 ($5,467,725 in 2023–24). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2023–24) the employee contributions and, for Group 2 members, approximately 1.00 time (1.00 time in 2023–24) the employee contributions.

FINTRAC’s responsibility with regards to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

(b) Severance benefits

Severance benefits provided to FINTRAC’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

8. Accounts receivable and advances

9. Tangible capital assets

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

During the year, management began an exercise to re-evaluate the pace of amortization on a variety of assets under its control and in order to ensure that any fully amortized or depleted assets, including those with no remaining useful life or utility were identified. As a result of work on this exercise, FINTRAC recognized $2.68M in amortization expense in 2024–25 which is included in the amortization expense reflected above. The entire $2.68M amount is related to historical cost (ie. prior to this fiscal year).

10. Contractual obligations

The nature of FINTRAC’s activities can result in some large multi-year contracts and obligations whereby FINTRAC will be obligated to make future payments when the services are received. For example, FINTRAC has entered into lease agreements with Public Services and Procurement Canada for office space in four locations across Canada. Significant contractual obligations that can be reasonably estimated are summarized as follows:

11. Related party transactions

FINTRAC is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual. FINTRAC enters into transactions with these entities in the normal course of business and on normal trade terms.

During the year, FINTRAC received common services which were obtained without charge from other government departments as disclosed below.

a) Common services provided without charge by other government departments

During the year, FINTRAC received services without charge from certain common service organizations, related to the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in FINTRAC’s Statement of Operations and Departmental Net Financial Position as follows:

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada, are not included in FINTRAC’s Statement of Operations and Departmental Net Financial Position. The costs of information technology infrastructure services provided by Shared Services Canada are also not included in FINTRAC’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with other government departments and agencies

12. Segmented information

Presentation by segment is based on FINTRAC’s program alignment architecture. The presentation by segment is based on the same accounting policies described in the Summary of Significant Accounting Policies in Note 3. The following table presents the expenses incurred and revenues generated for the main programs, by major object of expenses and type of revenue. The segment results for the period are as follows:

13. Risk management

FINTRAC has exposure to the following risks from its use of financial instruments: credit risk, market risk and liquidity risk.

(a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss. FINTRAC’s maximum exposure to credit risk at March 31, 2025 is the carrying amount of its financial assets. FINTRAC has determined that there is no significant concentration of credit risk related to accounts receivable from external parties. An analysis of the age of these financial assets and the associated valuation allowances used to reflect these accounts at their net recoverable value is disclosed in Note 6.

(b) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency risk and interest rate risk.

(c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities. As the funding for FINTRAC's financial liabilities is drawn from the Consolidated Revenue Fund, its exposure to liquidity risk is fully mitigated.

FINTRAC financial risks, and the process to manage these risks, have not changed significantly from the prior year.

Annex A

Annex to the Statement of management responsibility including internal control over financial reporting of Financial Transactions and Reports Analysis Centre of Canada for fiscal year 2024–2025

1. Introduction

In support of an effective system of internal control, the Financial Transactions and reports Analysis Centre of Canada (FINTRAC) conducted self-assessments of key control areas that were identified to be assessed in the 2024 to 2025 fiscal year. A summary of the assessment results and action plan is provided in subsection 2.

2. Assessment results for the 2024 to 2025 fiscal year

FINTRAC completed the assessment of key control areas as indicated in the following table. A summary of the results, action plans, and additional details are also provided.

With respect to the key control areas of financial management governance, overall, no material issues were identified; controls were functioning well and form an adequate basis for the organization’s system of internal control. Some issues related to documentation were identified and will be addressed and monitored through established processes.

3. Assessment plan

FINTRAC will assess the performance of its system of internal control by focusing on key control areas over a cycle of years as shown in the following table.