International

Paris [France], September 30 (ANI): A new report by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) has found that while Canada possesses a mature and nuanced understanding of its illicit finance risks, the country urgently needs to step up the investigation and prosecution of complex money laundering cases to counter threats driven by drug trafficking, fraud, and tax crimes often linked to organised crime syndicates and professional money launderers.

According to a release issued by the global financial crime watchdog, the mutual evaluation concluded that Canada has strengthened its defences against illicit finance since its previous assessment, notably by improving corporate transparency and beneficial ownership mechanisms. However, the report emphasized that substantial work is still required to reinforce risk-based supervision and address critical vulnerabilities across high-risk non-financial sectors.

While Canada maintains strong multi-layered inter-agency coordination to mitigate prominent money laundering threats, the watchdog noted that the country faces persistent challenges in investigating and prosecuting sophisticated money laundering schemes, including professional and standalone offences.

The evaluation found that Canada has made substantial progress to advance corporate transparency, including by introducing corporate beneficial ownership registers at the federal level and in Québec, disclosure requirements for companies, and land ownership transparency mechanisms in British Columbia.

Although authorities are generally able to obtain beneficial ownership information in a timely manner to support investigations, uneven implementation across provinces and territories is impacting effectiveness.

The report also raised concerns regarding supervision. Although Canada’s AML supervisor FINTRAC demonstrates a good risk understanding and has taken steps to enhance its risk-based supervision, the assessment found a significant portion of financial institutions and virtual asset service providers not being subject to an entity-level risk assessment, limiting its ability to target supervision at the highest-risk firms.

The report finds that the country should particularly improve its supervision of non-financial sectors, notably dealers in precious metals and stones (DPMS), and real estate. Organised criminal groups involved in drug trafficking are known to invest in real estate to launder their proceeds of crime, and certain large Canadian municipalities are high-value real estate markets that attract significant foreign investment.

Furthermore, while lawyers are subject to professional rules and oversight by Law Societies, they remain outside Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) framework. Law Societies have taken positive steps to reinforce the implementation of money laundering and terrorist financing-related obligations in this sector; however, this arrangement results in uneven coverage and sectoral gaps.

On the intelligence front, Canada demonstrates a strong capacity to use financial intelligence in support of money laundering and terrorist financing investigations, with the evaluation finding that FINTRAC information was used in 94% of Royal Canadian Mounted Police Federal Policing cases involving money laundering or a possession offence.

However, while financial institutions submit the majority of suspicious transaction reports, a significantly lower volume comes from non-financial sectors than would be expected given their exposure to higher risk activities. Lawyers are not required to submit suspicious transaction reports, which limits FINTRAC’s visibility over certain higher-risk financial activities.

FATF President, Giles Thomson, said, “As a major global economy, Canada has a strong understanding of the illicit finance risks it is facing, and has taken significant steps to strengthen corporate transparency and the use of financial intelligence since its last mutual evaluation. However, with the threats posed by fraudsters, organised crime networks and professional money launderers, Canada must step up efforts to investigate and prosecute complex money laundering cases, and strengthen oversight in the sectors most vulnerable to abuse.”

The Mutual Evaluation Report is the result of a rigorous, in-depth assessment spanning over fourteen months and including a three-week on-site visit in November 2025. The assessment team interacted with over 700 experts from the public and the private sectors, including the Ministries of Finance and Justice, law enforcement agencies, supervisors, financial institutions and non-financial businesses.

APG Co-Chair, Lesa Gale, said, “Canada is to be congratulated on its mutual evaluation outcomes. The report highlights a number of strengths, including Canada’s mature understanding of money laundering and terrorist financing risks, strong coordination across government, and its capacity to effectively access, analyse and use financial intelligence in support of criminal investigations and international cooperation. The APG looks forward to working with Canada to share its experience with members across the region.”

Regarding asset forfeiture, the evaluation found that Canada has made improvements with regard to asset recovery during the assessment period, increasingly treating it as a core policing function. In particular, Canada demonstrates sophisticated capability in seizing cryptocurrency, and during the review period seized and restrained assets exceeding CAD 1 billion.

However, asset recovery has developed unequally across the country’s federal system and its provinces. With operational and legal constraints still limiting the country’s ability to recover proceeds of crime, particularly in complex money laundering cases, more work is needed in this area.

Victim compensation from confiscated assets occurs to some extent but remains inconsistent.

The assessment also determined that Canada has a well-established and effective system to detect and investigate terrorist financing, with necessary mechanisms in place to prosecute cases as they arise.  –Risks are largely associated with lone‑actor attacks with limited financing needs, alongside some links to foreign‑based ideologically motivated groups using a range of funding channels.

Following the assessment, Canada received a roadmap of Key Recommended Actions to complete within three years. These include strengthening the effectiveness of risk-based supervision, including of non-financial sectors, continuing to progress implementation of a pan-Canadian corporate beneficial ownership framework, prioritising investigation and prosecution of complex professional and standalone money laundering cases in line with the country’s risk profile, and expanding asset recovery.

Based on Effectiveness and Technical Compliance Ratings, Canada is placed in regular follow-up. Canada will report back to the FATF on its progress. (ANI)