FINTRAC Hits CNE Casino With $199,000 Penalty for Money Laundering Failures

Canada’s anti-financial crime regime has struck a sharp blow against weak compliance in the gaming sector, with FINTRAC levying an administrative monetary penalty against the Canadian National Exhibition (CNE) Casino in Toronto.

The action illustrates both the persistent vulnerability of casinos to laundering schemes and the growing willingness of regulators to demand higher standards from compliance programs.

AML failings at CNE Casino

Investigators concluded that the CNE Casino had failed in two fundamental areas of its AML framework. It did not perform or document a risk assessment of money laundering and terrorist financing, and it also neglected to conduct a required internal review of its program.

These gaps were not, as officials stressed, “minor oversights.” Instead, they struck “to the heart of what makes a compliance regime functional.”

Casinos have long been considered magnets for laundering due to heavy cash turnover, rapid fund flows, and the ease with which money can be shifted between chips and currency with little scrutiny. Without a proper risk assessment, the CNE Casino lacked any systematic way of pinpointing where vulnerabilities might lie. As regulators observed, “criminals often exploit such gaps by using methods like smurfing,” where multiple small deposits slip below reporting thresholds, or through “minimal play,” in which cash is converted into chips, wagered superficially, and then cashed out to fabricate the appearance of winnings.

The absence of an internal compliance review deepened the shortcomings. Such reviews are designed to identify weaknesses—be it outdated monitoring systems, ineffective training, or weak reporting lines. By failing to conduct them, the casino effectively operated “blind to risks that could have allowed illicit funds to wash through its operations unnoticed.”

The result was an administrative penalty of $199,000. Regulators underscored that “the size of the penalty is significant enough to make an impact, while serving as a warning that regulators will hold casinos accountable when they fall short of their obligations.”

Canada’s legal regime and enforcement landscape

The Canadian anti-money laundering framework is anchored in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations. Under this law, casinos are legally defined as reporting entities and must comply with a strict set of obligations.

These include verifying client identities, recording large cash transactions, reporting suspicious activity, filing electronic funds transfer reports, and maintaining a compliance program built around documented risk assessments.

FINTRAC plays a dual role, both as financial intelligence unit and as supervisory authority. It gathers and analyzes transaction reports, shares intelligence with law enforcement and national security agencies, and enforces compliance through examinations and penalties.

Since being granted authority to impose administrative penalties in 2008, FINTRAC has sanctioned entities across diverse sectors—money services businesses, real estate companies, dealers in precious metals, and financial institutions. The casino sector, however, has always remained a top priority given its reliance on cash and a long record of being used for layering schemes.

The broader regulatory climate in Canada is shifting. Legislative proposals under Bill C-2, the Strong Borders Act, aim to expand registration obligations, increase maximum penalty tiers, and mandate compliance agreements for entities with systemic failings. The reform signals that regulators are moving away from an “educational” model toward tougher punitive measures, particularly as Canada prepares for its next FATF mutual evaluation. The fine against CNE Casino reflects this sharper enforcement environment.

Laundering techniques and criminal exploitation

The weaknesses at CNE Casino provided fertile ground for “classic laundering techniques.” Criminals frequently rely on structuring transactions below reporting thresholds, “chip walking,” and deploying third parties or “smurfs” to fragment large sums. Without risk-based monitoring, these practices can go unnoticed.

Another favored tactic is “minimal gaming.” In this scenario, launderers bring in large amounts of cash, exchange them for chips, place token bets, and then redeem the chips for a casino-issued check. The check gives the illusion of legitimate gambling proceeds.

Without an internal review, such conduct can easily slip under the radar.

The implications extend beyond a single operator. When one casino neglects compliance fundamentals, “it undermines the collective strength of the national AML regime.” Criminal groups are opportunistic, and once they identify weaknesses, “they concentrate their activity there.” This case reinforces the point that even mid-sized casinos can become key laundering hubs if they do not actively manage risk.

From a regulatory standpoint, the fine also highlights a tactical shift. FINTRAC’s message is that it will not only pursue “large systemic failures” but also penalize entities for neglecting the “basic building blocks of compliance.” The intended outcome is ripple effects across the sector, pushing all operators to update risk assessments, strengthen training programs, and adopt more advanced transaction monitoring tools.

Lessons for the sector

The lessons stemming from the CNE Casino case extend across all industries governed by Canada’s AML regime, not just gaming.

First, risk assessment is “not optional.” It must be continuous, tailored, and formally documented. Casinos, because of their unique exposure to anonymity risks and cash volume, cannot rely on generic templates. They must examine customer demographics, geographic vulnerabilities, and evolving transaction patterns.

Second, compliance reviews must be conducted and recorded regularly. These reviews act as internal audits, revealing whether suspicious transaction reporting is consistent, whether training programs are effective, and whether emerging risks—such as digital wallets or cryptocurrency-based gaming—are being addressed.

Third, creating a “culture of compliance” is indispensable. The cost of failure is not limited to penalties. Reputational harm, lost customer trust, and heavier regulatory oversight often outweigh the financial impact of fines. Casinos that demonstrate proactive compliance not only shield themselves from penalties but also build credibility in a sector where “public confidence is fragile.”

Fourth, the upcoming reforms under the Strong Borders Act raise the stakes considerably. With regulators soon empowered to impose higher fines and binding compliance agreements, operators struggling today will face even harsher consequences. As regulators stressed, “the time to strengthen compliance frameworks is now, not after enforcement actions escalate.”

Finally, the case highlights that appeals do not erase reputational scars. Although CNE Casino has requested judicial review, “the very fact that the penalty was imposed places the institution in the public spotlight.” For others, the warning is clear—even contested penalties carry lasting regulatory and reputational consequences. 

By fLEXI tEAM