Canada Falls Short on Prosecuting Sophisticated Money Laundering Cases

A recent report from the Financial Action Task Force (FATF) has highlighted Canada's vulnerabilities to money laundering, particularly in real estate and virtual assets. The evaluation covered 14 months and included a three-week visit to Canada in November 2025.

The report notes that organized crime groups involved in drug trafficking invest in real estate to launder their proceeds of crime, exposing real estate brokers, sales representatives, and developers to high-risk clients.

Lawyers are also subject to professional rules and oversight by law societies, but remain outside Canada's proceeds of crime and terrorist financing legislative framework. The report says that while law societies have taken positive steps to reinforce the implementation of anti-money laundering obligations, uneven coverage, sectoral gaps, and limited supervisory intensity affect their effectiveness.

Canada is considered a major global economy with a strong understanding of illicit finance risks. However, the report states that more efforts are needed to investigate and prosecute complex money laundering cases, particularly in large banks, certain money service businesses, virtual asset service providers, and private corporations.

The federal Liberals have tabled legislation to create the Financial Crimes Agency, a specialized federal law enforcement agency to investigate money-related offences. The report recommends that Canada develop and implement a comprehensive strategy to help the new agency address sophisticated and complex financial crimes.

Finance Minister François-Philippe Champagne welcomed the report, stating that the government will review and act on the recommendations. He noted that the report tracks an improvement since Canada's last evaluation in 2016 and offers a validation of the work the government is undertaking to better protect Canadians against fraud and the financial system against nefarious activity.