FINTRAC Reporting, Compliance Failures, and the Rise of FINTRAC API Solutions: Lessons from the Spence Diamonds $264,000 Penalty

On September 23, 2025, FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada) announced that it had imposed an administrative monetary penalty of $264,000 on Spence Diamonds Ltd. for significant failures in its compliance program. This penalty is a reminder that FINTRAC reporting obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) are not optional—and that businesses across Canada are under increasing scrutiny.

This blog will unpack what happened in the Spence Diamonds case, outline the specific FINTRAC reporting violations, and show how technology—particularly the FINTRAC API—is transforming how Canadian businesses stay compliant.

Source: FINTRAC Official News Release

Read the full FINTRAC announcement

What Happened: Spence Diamonds and FINTRAC's Findings

Spence Diamonds, a major dealer in precious metals and precious stones (DPMS) with multiple locations across Canada, was found to have committed several compliance breaches, including:

Failure to submit Suspicious Transaction Reports (STRs) where there were reasonable grounds to suspect money laundering or terrorist financing.
Failure to develop and apply written compliance policies and procedures, updated and approved by senior officers.
Failure to assess and document money laundering and terrorist financing risks, taking into account prescribed factors.
Failure to maintain a written ongoing compliance training program for staff, agents, or representatives.
Failure to conduct a prescribed effectiveness review of the compliance program.

While Spence Diamonds agreed to pay the penalty in full, the case highlights how common it is for businesses in regulated sectors to fall short of their AML compliance obligations.

Why FINTRAC Reporting Matters

FINTRAC is Canada's financial intelligence unit and AML/ATF regulator. Its role is to:

Collect, analyze, and disclose financial intelligence to law enforcement and national security agencies.
Ensure businesses comply with the PCMLTFA and related regulations.
Protect Canada's financial system from being exploited for money laundering, terrorist financing, or sanctions evasion.

For regulated entities—including money services businesses (MSBs), casinos, real estate brokers, DPMS dealers, and financial institutions—compliance obligations are extensive. Businesses must:

File FINTRAC reports, including:

Suspicious Transaction Reports (STRs)
Large Cash Transaction Reports (LCTRs)
Large Virtual Currency Transaction Reports (LVCTRs)
Electronic Funds Transfer Reports (EFTRs)

Identify and verify clients through proper KYC (Know Your Customer) procedures.
Keep detailed records of transactions and client information.
Implement a compliance program, including policies, risk assessments, training, and effectiveness reviews.

Failure to meet these obligations exposes businesses to significant fines, reputational damage, and regulatory intervention.

The Shift Toward FINTRAC API Solutions

One of the biggest challenges businesses face is that FINTRAC reporting requirements are manual, complex, and time-consuming if not automated. This is where the FINTRAC API comes in.

The FINTRAC API allows reporting entities (directly or through third-party RegTech platforms like Comply+) to:

Automate LCTR, LVCTR, STR, and EFTR submissions directly to FINTRAC.
Validate reports against FINTRAC's schema to reduce rejections and errors.
Streamline compliance workflows by connecting transaction monitoring systems with FINTRAC reporting.
Track submission status and maintain an auditable record of compliance activity.

By leveraging API-based compliance tools, businesses reduce the risk of missing a report, improve accuracy, and free up internal resources.

Why the Spence Diamonds Case Should Matter to You

The Spence Diamonds penalty illustrates several important lessons:

Suspicious Transaction Reports (STRs) are non-negotiable. FINTRAC views STRs as one of the most critical inputs to Canada's AML regime. Failing to file them—even if the transaction seems "uncertain"—is a serious violation.
A compliance program is only effective if it is written, current, and applied. Outdated or informal processes won't pass FINTRAC's review.
Risk assessments must be documented. FINTRAC expects detailed evidence that you've evaluated ML/TF risks specific to your business model, geography, and customer base.
Training isn't optional. Every employee or agent handling transactions must receive AML training.
Regular compliance reviews are mandatory. Without periodic testing of your compliance program, regulators assume it's not effective.

How Businesses Can Avoid Penalties

To stay ahead of enforcement, Canadian businesses should:

Adopt automated FINTRAC reporting solutions powered by the FINTRAC API.
Conduct annual risk assessments and update them whenever business activities change.
Develop robust AML policies and ensure they are approved at the senior officer level.
Provide annual AML training to all staff, agents, and contractors.
Perform independent effectiveness reviews to test your compliance program.

Solutions like Comply+ are designed to help Canadian MSBs and other reporting entities meet these obligations. With automated LCTR, STR, LVCTR, and EFTR reporting via the FINTRAC API, as well as risk assessment and training modules, platforms like ours make compliance simple and scalable.

The Future of FINTRAC Reporting

FINTRAC's enforcement actions are increasing, with 23 Notices of Violation and more than $25 million in penalties issued in 2024–25 alone. As enforcement accelerates, businesses that fail to invest in compliance automation will be exposed.

The future of FINTRAC reporting is API-driven, data-driven, and increasingly integrated with business operations. Compliance is no longer just a regulatory checkbox—it's a strategic advantage.

Final Thoughts

The $264,000 penalty against Spence Diamonds is a wake-up call for all Canadian businesses subject to the PCMLTFA. FINTRAC reporting is not optional, and failures in compliance programs come with real financial consequences.

The good news is that businesses now have better tools than ever to stay compliant. By adopting FINTRAC API integrations and modern RegTech platforms like Comply+, companies can automate their reporting, reduce risks, and demonstrate to regulators that they take compliance seriously.

If your organization is struggling with FINTRAC reporting, AML compliance, or API integration, now is the time to act—before FINTRAC acts for you.