Canada tightens FINTRAC compliance focus on DPRK-linked transactions after FATF action

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Highlights

Following the FATF June 19, 2026 statement, Canada’s finance minister now requires all DPRK-linked financial transactions to be treated as high-risk regardless of amount.
Entities under section 5 of the Act must verify identities, review transaction purpose, assess sanctions evasion risk, and implement enhanced due diligence for DPRK transactions.
FINTRAC confirms compliance with this directive is now supervisory, and reminds firms to monitor FATF classifications, as changes affect Canadian due diligence and reporting obligations.

Updated directive for high-risk jurisdictions

As reported by FINTRAC, citing the Financial Transactions and Reports Analysis Centre, the latest advisory follows the Financial Action Task Force statement issued on June 19, 2026 on jurisdictions subject to a call for action and those under increased monitoring.

The FATF says its high-risk list requires members to apply either countermeasures or enhanced due diligence, with the Democratic People's Republic of Korea and Iran subject to stronger measures and Myanmar subject to risk-based enhanced scrutiny. In its latest statement, the FATF reiterates concerns that the DPRK continues to fail to address significant deficiencies in its anti-money laundering and counter-terrorist financing regime, and it warns about illicit activity linked to weapons proliferation financing.

Under section 11.42 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, Canada’s finance minister has issued a directive requiring every person or entity covered by section 5 of the Act to treat all financial transactions originating from or bound for the DPRK as high-risk, regardless of amount. Those entities must verify the identity of parties involved, carry out customer due diligence, determine source of funds or virtual currency, review the purpose of the transaction and beneficial ownership, retain records, and ensure their compliance programs include policies to assess sanctions evasion risks associated with the DPRK.

Entities involved in correspondent banking relationships must also consider DPRK-related sanctions evasion risk when applying regulatory measures and ongoing monitoring. They are further required to evaluate how foreign jurisdictions where partner institutions are incorporated or transact implement United Nations Security Council sanctions against the DPRK.

Implications for reporting entities and sanctions controls

FINTRAC says it assesses compliance with the ministerial directive, reinforcing that the advisory is not only informational but part of Canada’s supervisory approach to financial crime controls. The notice also states that similar directives remain in place for Iran because the FATF continues to identify deficiencies in the country’s AML/CFT framework and limited progress on its longstanding action plan.

For reporting entities, the update broadens operational focus beyond direct transaction screening to include sanctions evasion risk assessment, recordkeeping and cross-border banking controls. The reference to Myanmar and to jurisdictions under increased monitoring also signals that firms must stay alert to changing FATF classifications because those designations can affect due diligence, sanctions compliance and reporting obligations across the Canadian financial sector.

Our earlier report on U.S. Treasury sanctions targeting Iran’s IRGC procurement network detailed how seven individuals and entities were designated for supporting cross-border weapons procurement via aviation, transport and financial intermediaries. It noted that the measures block property under U.S. jurisdiction and warned that foreign financial institutions can face secondary sanctions risk, including restrictions on U.S. correspondent and payable-through accounts.

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