Fraud Prevention Month 2026 Series
Fraud in Canada: An Ongoing Series for Payment Businesses
March is Fraud Prevention Month in Canada — a reminder that fraud doesn’t just affect individuals, it threatens the businesses and financial infrastructure Canadians rely on every day. We’ve been running an ongoing series spotlighting the fraud trends most relevant to payment service providers, money services businesses, and the merchants we work with.
More in this series
The Hidden Risk of Forwarded Interac e-Transfers
In Canada’s digital payment landscape, Interac e-Transfers have become ubiquitous, facilitating quick and convenient transactions. However, accepting forwarded e-Transfers poses significant compliance and fraud risks, particularly for MSBs and PSPs like Apaylo. This practice, where funds are redirected through intermediaries, often obfuscates the true source of funds, enabling money laundering and illicit activities.
Forwarded e-Transfers occur when bad actors from illegal or illicit operations—such as drug trafficking or human trafficking—use legitimate MSBs to receive and redirect funds on their behalf. This intermediary step hides the origin, forming part of the placement and layering stages in the anti-money laundering (AML) chain. For instance, a fraudster might send an e-Transfer to an MSB client, who then forwards it to the criminal, masking the trail.
The risks are multifaceted. Compliance-wise, FINTRAC mandates MSBs to verify sources of funds, report suspicious transactions, and maintain records. Accepting forwarded transfers without scrutiny can violate these, leading to AMPs up to $500,000 per violation or criminal penalties. It exposes businesses to interception scams, where fraudsters divert legitimate transfers using stolen credentials or guessed security questions. The CAFC reports rising e-Transfer frauds, often via phishing emails mimicking legitimate notifications.
DID YOU KNOW?
According to the Canadian Anti-Fraud Centre, Canadians lost over $94 million in crypto payments in a single year, with funds routinely funnelled through exchanges across multiple jurisdictions — making merchants an unwitting link in the chain (Canadian Anti-Fraud Centre, as cited by CBC News, December 2024).
Under RPAA, PSPs must safeguard funds and manage operational risks, including fraud detection. Non-compliance risks include loss of registration and penalties.
To counter this, MSBs should implement strict policies: reject forwarded transfers unless fully verified, use Autodeposit to ensure a direct audit trail from sender to your MSB, and monitor for red flags like unsolicited large transfers. Apaylo advises merchants to report suspicious activity to phishing@interac.ca and local authorities.
In essence, forwarded e-Transfers facilitate obfuscation, heightening AML risks. Apaylo enforces rigorous checks, ensuring a compliant ecosystem.
