More than two decades after Canada’s auditor general flagged weaknesses in its money laundering watchdog, a new audit has found similar shortcomings in its financial intelligence and oversight of financial crime. 

The report, tabled in the House of Commons on Thursday, found that the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) took an average of 112 days—or nearly four months—to deliver financial intelligence after law enforcement or national security agencies flagged concerns.

Half of surveyed recipients said the intelligence arrived too late to be useful. The auditor general warned such delays could leave authorities unable to freeze assets, stop transactions or identify suspects before criminals moved or laundered money.

The findings, which cover the period between January 2023 to February 2026, echo concerns the auditor general raised in its 2004 audit, which found that Fintrac’s intelligence rarely prompted new criminal investigations. In the latest audit, only 35 per cent of surveyed participants said the agency’s proactive intelligence led to new investigations most or all of the time.

Auditor general Karen Hogan told reporters her office decided to review Fintrac partly because of the emergence of new players in the financial system, including digital currency businesses.

“[Fintrac] need[s] to better leverage technology to be able to really get more effective at fulfilling their mandate,” Hogan said.

The audit comes after the Financial Action Task Force (FATF), an international money laundering watchdog, downgraded Canada’s supervision of financial institutions from “largely compliant” to “partially compliant” last month. The assessment cited weaknesses in enforcing anti-money laundering rules at banks and ensuring that regulators were independent and accountable. 

In a statement accompanying the auditor general’s report, Fintrac said it had improved its disclosure process and strengthened analytical tools to reduce turnaround times for non-urgent cases. It pointed to the FATF evaluation, which found that 40 per cent of cases assessed as urgent resulted in disclosures within 10 days, while the remaining 60 per cent took between 11 and 30 days. The agency did not provide an updated average processing time for all cases.

The audit also found that Fintrac struggled with outdated technology despite a multimillion-dollar modernization effort. The federal government allocated $29.6 million over five years in its 2022 budget, followed by $2.6 million annually, to help Fintrac acquire a new software platform. But as of February 2026, the agency had spent $13.3 million and still could not determine the project’s final cost or completion date. Key expenses, including licensing and vendor costs, remained unknown. 

The auditor general also found that Fintrac never considered adopting goAML, a United Nations software used by more than 70 countries, which would cost significantly less than Fintrac’s system, according to a UN estimate.

In response, Fintrac said it had made significant progress developing a more capable model. It expects to initially deploy it by next winter and has committed to assessing goAML by the end of the year. 

Meanwhile, the volume of financial data flowing into the agency has surged. Fintrac received more than 65 million financial transaction reports in 2024 to 2025, an 80 per cent increase from 2022 to 2023. Yet analysts still performed key tasks manually, often taking several days to complete work that software could have sped up, the report found.

The audit also found that the watchdog had become less proactive in identifying potential financial crimes. The share of intelligence disclosures the agency produced on its own, rather than in response to external information, fell from 38 per cent in 2021 to 2022 to 23 per cent in 2024 to 2025.

Fintrac has also struggled to clear a backlog of registrations and renewal requests from money services businesses, including crypto exchanges, after a 2024 cyberattack forced it to shut down its corporate systems. The agency continued processing requests manually while developing a replacement, leaving about 2,500 requests outstanding by the time the audit was published. 

Fintrac has pledged to improve its performance reporting to focus more closely on outcomes, with changes expected in 2027 and 2028. The agency also said it would use an additional $37 million over the next two years to strengthen oversight of the 38,000 businesses subject to Canada’s anti-money laundering laws.

“There’s a lot of opportunity here to improve because Fintrac plays a key role in protecting Canada’s financial system,” Hogan said.