Factoring Businesses
Streamline client verification, assess third-party risk, and automate FINTRAC reporting—all while meeting your mandatory AML obligations. Compliance under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) is not optional—it is a legal requirement for factoring firms and trade finance professionals operating in Canada.
Avoid regulatory gaps, reduce manual overhead, and prepare for audits with tools designed specifically for invoice-backed funding workflows.
Who Is It For?
This solution is designed for firms managing third-party receivables, advance payments, and invoice-backed funding—where high-value transactions, client onboarding, and ongoing risk assessment require regulatory clarity and operational efficiency.
Industry Overview
Factoring and trade finance companies serve as vital liquidity engines for businesses—but their operations often involve multiple parties, non-traditional customers, and irregular payment sources. These factors increase exposure to money laundering risks and regulatory oversight.
As reporting entities under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), factoring firms must perform client identification, recordkeeping, and transaction monitoring with the same diligence as banks.
New Compliance Landscape: Bill C-2
Canada’s Bill C-2, currently in Parliament, introduces sweeping changes to anti-money laundering laws. It proposes:
Stricter penalties:
Individuals could face fines of up to $4 million per violation, while entities such as factoring firms and finance providers may face up to $20 million.
Cumulative penalties:
For multiple infractions, fines may rise to the greater of $4M or 3% of global income (individuals), and $20M or 3% of global annual revenue (entities).
Mandatory FINTRAC enrolment:
All regulated businesses, including trade finance platforms, must enrol with FINTRAC unless specifically exempted. This includes submitting detailed applications, renewing periodically, and updating business information as needed.
These changes make proactive compliance more important than ever. Our platform helps firms in factoring and receivables management stay ahead of evolving obligations without operational disruption.
Common Challenges
Our Solutions
Uncertainty around identity verification requirements
Streamline collection and validation of ID documents and business records.
Guidance tailored for corporations, sole proprietors, and partnerships.
Lack of clarity when factoring for third-party clients
Identify and log the beneficial owner or true recipient behind an invoice.
Ensure accurate disclosure in case of payment redirection.
Complex documentation trails in accounts receivable
Attach, store, and timestamp credit agreements, invoices, and verification docs.
Connect multiple debtors or guarantors to a single transaction record.
Missed reporting obligations for large or suspicious transactions
Detect reportable activity and pre-fill FINTRAC-compliant forms.
Flag transactions for compliance officer review before filing.
Limited internal resources for compliance program implementation
Customize FINTRAC-compliant AML policies with minimal effort.
Equip your staff with up-to-date regulatory knowledge.
Services Relevant to This Industry
Client and Beneficial Ownership Verification
Capture required information and documents to meet FINTRAC obligations.
Third-Party Handling Documentation
Identify and record when funds or services involve unlisted entities.
Suspicious Transaction Reporting (STR)
Detect patterns inconsistent with a client’s profile or invoice behavior.
Large Cash Transaction Reporting (LCTR)
Track and report payments exceeding CAD 10,000 per FINTRAC rules.
AML Policy Management
Access templates and guidance to develop your full compliance program.
Audit-Ready Recordkeeping
Secure five-year data storage with filtering and export capabilities.
Real-World Use Cases
Use Case 1: Financing a sole proprietor’s invoices
Platform collects business registration, proof of address, and ID documents, verifying the client under FINTRAC’s sole proprietor rules.
Use Case 2: Third-party collects on behalf of client
A factoring client requests disbursement to another entity. The system flags this for third-party verification and stores the rationale for audit.
Use Case 3: STR triggered by unusual repayment behavior
Payments arrive in inconsistent amounts from unrelated bank accounts. Platform escalates case for internal review and STR filing.
Frequently Asked Questions
Do we need to verify the identity of our clients if we’re only factoring invoices?
Yes. You must identify clients when forming a business relationship or conducting transactions over CAD 10,000.
What if we receive repayment from a third party?
You must determine if a third party is involved and record their details and the nature of their relationship to your client.
Are we required to report every large payment we receive?
Only cash transactions of CAD 10,000 or more need to be reported as LCTRs. Suspicious transactions must be reported regardless of amount or method.
What’s the best way to store compliance documents?
Use centralized, timestamped recordkeeping with secure retention and filtering for easy audits.
Do we need a full AML program like a bank?
Yes. FINTRAC requires factoring firms to maintain a compliance regime, including policies, officer designation, training, and effectiveness review.
Getting Started
Bring clarity, speed, and structure to your compliance operations. Whether you're scaling invoice finance or streamlining your regulatory program, we have the tools you need to stay compliant and competitive.
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Our team is here to listen, answer your questions, and help you get compliant — fast.
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