Canada has spent years adding new reporting rules, transparency measures and enforcement tools to its anti-money-laundering system. The latest international review is asking a harder question: are sophisticated laundering networks actually being taken through the courts and stripped of their proceeds? The Financial Action Task Force, the global standard-setter for combating illicit finance, says Canada has strong investigative capacity and a solid understanding of its risks, but still needs to prioritize complex and professional money-laundering cases, strengthen risk-based supervision and improve asset recovery. The warning lands in a country where authorities estimate that C$45 billion to C$113 billion is laundered each year, with real estate among the sectors assessed as highly vulnerable. Ottawa has tightened beneficial-ownership rules, expanded FINTRAC’s reach and proposed a dedicated Financial Crimes Agency. The next test is whether those reforms produce more difficult cases that end in meaningful enforcement results.
The Watchdog Wants More Courtroom Results
The FATF’s new message to Canada is less about writing more rules than proving the existing system can deliver results against sophisticated criminal finance. Reuters reported that the watchdog praised Canada’s investigative capabilities but said authorities continue to struggle with professional and stand-alone money-laundering cases. It urged greater prioritization of complex investigations and prosecutions, along with stronger risk-based supervision in sectors where exposure is highest.
That distinction matters because the fifth round of FATF evaluations places heavy weight on effectiveness: whether laws, regulators, intelligence and enforcement powers are actually being used to disrupt illicit finance. Canada has made substantial technical improvements since its previous evaluation in 2016, but FATF’s new three-year roadmap is designed around measurable outcomes. For investigators and prosecutors, the benchmark is therefore not simply how many suspicious transactions are reported, but whether high-risk laundering networks are identified, charged, prosecuted and deprived of criminal proceeds at meaningful scale.
The Scale of the Problem Runs Into Tens of Billions
The numbers explain FATF’s push for more ambitious cases. Canada’s 2025 National Risk Assessment cites a Criminal Intelligence Service Canada estimate that between C$45 billion and C$113 billion is laundered each year. The government cautions that money laundering is difficult to measure because it is clandestine, so the range is an estimate rather than a precise tally. Even at the low end, it represents an illicit economy moving beside legitimate commerce.
The assessment ranks illegal drug trafficking as Canada’s highest money-laundering threat, followed by fraud, commercial trade fraud and trade-based money laundering, and tax crimes. Each is estimated to generate billions of dollars in illicit proceeds annually. Organized crime groups and third-party enablers are identified as the main laundering threat actors, while large-scale operations often rely on specialists who move or disguise money for others. That makes the challenge broader than catching criminals spending their own proceeds at national scale.
Professional Laundering Is Becoming a Service Industry
Professional money laundering increasingly operates like a service industry. A FATF report released in September 2026 described networks moving value for organized crime through underground banking, transfer systems, fintech platforms and virtual assets. More than 80% of reporting jurisdictions identified underground banking and similar providers among principal professional-laundering channels or techniques, and some examined schemes moved more than €500 million within a few months.
Canada’s risk assessment reaches a similar conclusion: most large-scale and sophisticated laundering operations involve specialized third parties working for commissions, fees or other benefits. These arrangements can separate the original criminal from the people moving proceeds, stretch transactions across borders and layer legitimate-looking businesses between them. That helps explain FATF’s emphasis on stand-alone and professional laundering prosecutions. The target is not only a drug trafficker or fraudster with suspicious funds, but the financial infrastructure that allows multiple criminal groups to turn dirty money into usable assets.
Real Estate Remains a High-Vulnerability Pressure Point
Real estate sits at the centre of concern because Canada’s 2025 risk assessment rates real estate brokers, sales representatives and developers as highly vulnerable to money laundering and terrorist financing. Most property deals are ordinary, but risk rises when transactions use shell companies, third parties, complex ownership or assignment clauses transferring purchase rights before possession. The sector can encounter politically exposed persons, foreign investors and clients connected to higher-risk jurisdictions.
The assessment says suspicious-transaction reporting from real estate remains low and identifies deficiencies in compliance programs, monitoring, enhanced due diligence, record keeping and client checks. In February 2026, FINTRAC disclosed a C$148,912.50 administrative penalty against Century 21 Heritage Group Ltd. for failing to file one suspicious transaction report where FINTRAC found reasonable grounds for suspicion. The brokerage appealed to Federal Court, a distinction because the penalty is under challenge rather than a final criminal finding.
The Legal Sector Remains a Longstanding Complication
Another pressure point is the legal sector. Canada’s assessment rates lawyers and Québec notaries as highly vulnerable, estimating 136,000 lawyers and 4,200 Québec notaries nationwide. The concern is not that legal work is suspicious. Services such as trust accounts, real-estate transfers, corporate and trust formation, and financial transactions can attract criminals seeking to obscure ownership, layer funds or give transactions an appearance of legitimacy.
Canadian lawyers and Québec notaries are not subject to the federal anti-money-laundering law in the same way as most reporting entities. In 2015, the Supreme Court of Canada held that provisions then applying the regime to lawyers breached constitutional protections involving solicitor-client privilege and lawyers’ duties to clients. Law societies instead impose their own rules, including client-identification and trust-account requirements. FATF nevertheless identified the federal coverage gap as a serious issue in 2016, and the scrutiny shows why legal-sector oversight remains part of the effectiveness debate.
Beneficial Ownership Is More Transparent, but the System Is Not Uniform
Canada has made a major transparency change since its last FATF evaluation. Since January 22, 2024, corporations governed by the Canada Business Corporations Act have had to file information on individuals with significant control—their beneficial owners—with Corporations Canada. Some information is publicly searchable, while FINTRAC and law enforcement can access non-public information. The aim is to make it harder to hide control of assets behind layers of corporate names.
The rules tightened on October 1, 2025. Most FINTRAC-regulated businesses must compare information for high-risk federal corporations against the registry and report material discrepancies within 30 days, unless resolved. The limitation is jurisdictional: the federal registry covers corporations created under federal law, while companies can also incorporate provincially and territorially. Ottawa says all provinces and territories have discussed a pan-Canadian approach, with several adopting their own measures. Investigators therefore have more ownership data than before, but not one uniform national system.
FINTRAC Is Producing Record Enforcement and Intelligence Numbers
On supervision and intelligence, Canada can point to sharply rising activity. FINTRAC said that in fiscal 2025–26 it issued 35 notices of violation for non-compliance, the largest number in a single year, with penalties totaling more than C$247 million. Since receiving administrative-penalty authority in 2008, the agency says it has imposed more than 180 penalties across most sectors. That is a tougher compliance posture than in earlier years.
The intelligence pipeline has expanded too. FINTRAC reported producing 7,214 financial-intelligence disclosure packages from 3,007 unique disclosures in 2025–26, another record. Its intelligence identified 10,650 subjects of interest and contributed to 348 major, resource-intensive investigations, plus hundreds of other investigations at federal, provincial and municipal levels. Those figures show investigators are receiving more financial leads. FATF’s concern is what happens next: intelligence and administrative penalties are useful inputs, but they are not substitutes for successful complex criminal prosecutions and recovery of proceeds.
The Prosecution Handoff Has Been a Longstanding Challenge
Canada’s own reviews identified the prosecution problem before the latest FATF assessment. A federal performance report released in 2023 noted that money-laundering charges had declined and convictions were low in absolute terms. It recorded that only four federally prosecuted money-laundering charges resulted in a conviction or guilty plea in 2019–20. Those figures are historical, not a current conviction rate, but they explain why the 2026 recommendation is familiar.
The same review listed obstacles in complex financial cases: difficulties sharing information, hidden beneficial ownership, lengthy procedures for foreign assistance and delays securing financial records. Professional laundering can magnify each problem by spreading transactions across companies, accounts and jurisdictions. Canada has since changed information-sharing rules, strengthened ownership transparency and expanded regulated sectors. FATF is now testing whether those reforms shorten the distance between a suspicious financial trail, a viable criminal charge and a case that can survive in court under sustained scrutiny.
Asset Recovery Is Part of the Effectiveness Test
FATF also wants Canada to improve asset recovery, a measure beyond counting charges or convictions. Canada’s 2023–26 anti-money-laundering strategy acknowledged that earlier reviews found low proceeds-of-crime recovery and said federal asset forfeitures, money-laundering charges and convictions had decreased over the preceding decade. The government responded by making criminal asset recovery part of its operational-improvement agenda and considering additional resources for investigations and recovery efforts.
The logic is straightforward: a criminal network can absorb arrests more easily if money, property and business assets generated by crime remain available to it or its associates. Recovery can be difficult where ownership is obscured by corporations, trusts or cross-border arrangements, which is why beneficial-ownership transparency and international cooperation matter to the same enforcement chain. FATF’s emphasis connects several issues that can look separate on paper. Reporting, intelligence, prosecution and confiscation are intended to work as one system, not as isolated measures producing separate statistics.
Ottawa’s Proposed Financial Crimes Agency Could Change the Structure
Ottawa’s structural response is the proposed Financial Crimes Agency. Bill C-29, introduced April 27, 2026, would create a specialized federal agency to investigate serious financial crimes and help recover criminal proceeds. The government wants civilian and police investigators, intelligence specialists and asset-recovery experts working with dedicated prosecutors. Parliament’s LEGISinfo lists the bill at second reading in the House of Commons, meaning the agency has not yet been established.
The Spring Economic Update proposed C$352.7 million over five years for the agency, plus C$82.1 million annually thereafter. It also proposed C$46.2 million over five years and C$11.5 million ongoing for the Public Prosecution Service of Canada. Finance briefing material says phased implementation is expected after Royal Assent, with full capability targeted for 2027. That makes the agency central to Canada’s answer to FATF, but its value will depend on whether specialized teams convert intelligence into complex cases and recover criminal assets.
Canada Now Has a Three-Year Window to Show Results
The timing gives Canada a clearer deadline than in earlier FATF rounds. Under fifth-round procedures, countries receive a time-bound roadmap of key recommended actions and generally have three years to address deficiencies. The process emphasizes the highest risks and whether governments use laws effectively rather than merely adopting them. Canada’s roadmap includes stronger risk-based supervision, more focus on complex money-laundering prosecutions and improved asset recovery.
There is continuity. In 2016, FATF said Canada needed stronger supervision of real estate and dealers in precious metals and stones, flagged the legal-profession gap and described proceeds-of-crime recovery as relatively low. Canada has made meaningful changes since then, including a federal beneficial-ownership registry, broader FINTRAC coverage and record enforcement activity. The 2026 assessment therefore reads less like a claim that nothing has changed and more like a demand to prove the expanded architecture can produce results against sophisticated networks Canada identifies as laundering threats.
