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The movement of synthetic opioids across North America, which have contributed to hundreds of thousands of deaths in recent years, is under the spotlight. In 2024, the Canadian border services “reported seizing 10.8lbs of fentanyl entering from the US, while the US border patrol intercepted 32.1lbs of fentanyl coming from Canada.” As a result, on March 4, 2025, the US imposed a 25% tariff on Canadian goods. Additionally, fentanyl trafficking from Mexico has increasingly been associated with Chinese chemical suppliers, intensifying the need for international cooperation and enhanced monitoring mechanisms.
As Canada rolls out its $1.3 billion border plan, the question remains: is there a more effective way to crack down on drug trafficking and its role in money laundering, in Canada and across the globe?
Cutting off the funding for synthetic opioid trafficking
Beyond the border, fentanyl production and distribution in Canada intersects with multiple detection points, including the Canada Border Services Agency (CBSA), law enforcement, financial institutions, and reporting entities. A more comprehensive way of viewing fentanyl flows is needed, with particular steps for financial institutions and reporting entities to take to identify those transactions.
However, the impact of fentanyl trafficking cannot be isolated to Canada alone. Chinese chemical suppliers continue to play a key role in the production of fentanyl , which has seen an alarming rise in use. These chemicals are often shipped to Mexico, where cartels then transport the drugs across the U.S. border.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) issued an operational alert in early 2025, exposing the sophisticated money laundering schemes used by organised crime groups. It showed that online betting platforms are being used to launder money from the dealing and production of fentanyl. This was after an analysis of 5000 suspicious transaction reports filed in Canada related to fentanyl and synthetic opioids between 2020 and 2023.
One case was highlighted where an individual received hundreds of high-value e-transfers from a payment processor linked to online gambling. These processors facilitate deposits and withdrawals for online casinos, disguising transactions as standard e-transfers rather than gambling-related transfers, making them appear more legitimate to banks and financial institutions.
Financial institutions and reporting entities should identify potential fentanyl-related transaction points within their operations, using FINTRAC’s operational alert as a starting guide.
Identifying fentanyl-related indicators for financial institutions
Financial institutions globally should evaluate their current anti-money laundering (AML) frameworks to identify gaps in detecting drug-related financial activity. Strengthening detection capabilities can be achieved through the following enhancements:
1. Enhanced KYC and CDD during onboarding
A strong know your customer (KYC) and customer due diligence (CDD) process is essential to establishing a baseline for customer behaviour and identifying anomalies linked to fentanyl-related activities. Financial institutions and reporting entities should consider developing industry-specific KYC/CDD questions, particularly for transportation and shipping companies, which may unknowingly be exploited for fentanyl distribution. For example, this might include expected counterparty types and fund flows, verifying the legitimate business purpose of accounts, and understanding shipping routes and high-risk corridors.
Additionally, financial institutions should be aware that employees of certain businesses may be at risk of being bribed to facilitate fentanyl movement. Enhanced scrutiny should be applied to accounts linked to such sectors.
2. Seeing real world impact through transaction monitoring with data analytics
Traditional transaction monitoring systems may not be sufficient to detect fentanyl-related money laundering. The adoption of data analytics into transaction monitoring systems will allow financial institutions to process large volumes of diverse datasets, revealing transaction patterns that might otherwise go undetected. The result is more comprehensive and accurate suspicious transaction filings.
Automation from AI enables account-specific monitoring for businesses operating in fentanyl-adjacent industries. High-risk payment channels, such as cross-border bill payment systems, should be restricted from processing person-to-person transactions.
3. AI-powered client screening
Manual client screening processes at initial onboarding and throughout the customer lifecycle make it nearly impossible to understand the underlying risk and how it changes over time, making the prohibition of the moving of illicit funds difficult. Financial institutions should be able to easily configure screening parameters to align with changes to their risk-appetite and evolving typologies, using AI to identify fentanyl touch points faster.
A shift in mindset in financial crime compliance
We need a shift in mindset when it comes to financial crime compliance, with a greater understanding of what is at stake for not only the financial institution, but the world around it. The Napier AI / AML Index 2024-2025 tracks the impact of AI on AML globally, including Canada. It found that, Canada could recover $65 billion USD from organised crime, back into the economy by using AI-powered AML strategies. The same report found that global economies can save $3.13 trillion annually using AI to detect and prevent money laundering and terrorist financing.
While FINTRAC is looking to advance digital automation and the use of AI to better assess risk in real-time, the supervisor is cracking down on financial crime with significant fines for regulated firms. To avoid this, financial institutions will need to integrate compliance strategies with broader modernization initiatives including AI technologies.
This should not be done in vain; any AI implementation should consider AI readiness, data governance and the business model. If the global financial services industry taps in to better use of AI in AML, it will do a much better job of cutting off the funding of the criminal organisations that traffic synthetic opioids and other drugs, at the source.
Download your copy of the Napier AI / AML Index to learn more about the use of AI in AML in Canada.
Photo by Burak Tüylek on Unsplash
