Canada can do more to prosecute sophisticated money laundering cases: watchdog report

Bank notes issued by the Bank of Canada are seen in a display case at the Bank of Canada Museum in Ottawa, on Sept. 4, 2024. THE CANADIAN PRESS/Justin Tang

OTTAWA — Canada is making strides in the fight against criminal efforts to disguise illicit cash but can do more to investigate and prosecute complex money laundering cases, says a new international watchdog report.

The report, an independent, peer review assessment by the Financial Action Task Force and the Asia-Pacific Group on Money Laundering, says Canada has developed “a mature and nuanced understanding” of money laundering and terrorist financing threats and vulnerabilities.

It also applauds Canada’s strong co-ordination across government and ability to use financial intelligence to support criminal investigations and international efforts.

But the report calls on Canada to improve its supervision of non-financial sectors, including dealers in precious metals and stones and real estate.

Organized criminal groups involved in drug trafficking are known to invest in real estate to launder their proceeds of crime, meaning real estate brokers, sales representatives and developers can be exposed to high-risk clients, the report says.

It also notes while lawyers are subject to professional rules and oversight by law societies, they remain outside Canada’s proceeds of crime and terrorist financing legislative framework.

Law societies have taken positive steps to reinforce the implementation of anti-money laundering obligations but “uneven coverage, sectoral gaps and limited supervisory intensity” affect the level of effectiveness, the report says.

‘Threats posed by fraudsters’

The evaluation is the result of a peer review assessment process which sees experts from different countries gauge the effectiveness of other countries’ measures against money laundering, terrorist financing and proliferation of weapons of mass destruction.

The report on Canada covered 14 months and included a three-week visit in November 2025. The reviewing organizations say the assessment team interacted with over 700 experts from the public and the private sectors, including the finance and justice departments, law enforcement agencies, supervisors, financial institutions and non-financial businesses.

“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,” Financial Action Task Force president Giles Thomson said in a media statement.

“However, with the threats posed by fraudsters, organized 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.”

Finance Minister François-Philippe Champagne welcomed the report, saying in a statement the government will review and act on the recommendations.

He said the report tracks an improvement since Canada’s last evaluation in 2016 and offers a “validation of the work the government is undertaking with agencies and provinces together to better protect Canadians against fraud and the financial system against nefarious activity.”

The report says money laundering in Canada is linked mainly to proceeds from drug trafficking, fraud, commercial trade fraud and tax crimes, often involving organized crime groups and professional money laundering intermediaries.

Key vulnerabilities are present in large banks, certain money service businesses, virtual asset service providers and private corporations, with “growing exposure” related to virtual assets, crowdfunding mechanisms and online gambling platforms, the report says.

Terrorist financing activity is “generally low in value and volume,” reflecting the risk associated with lone‑actor attacks with limited financing needs, the report says.

The federal Liberals have tabled legislation to create the Financial Crimes Agency, a specialized federal law enforcement agency that will investigate money-related offences and contribute to the recovery of proceeds of crime.

Canada should develop and implement a comprehensive strategy to help the new agency address sophisticated and complex financial crimes, the report says.

Champagne said in the media statement the new agency will bolster Canada’s capacity to combat serious and complex financial crime “and improve enforcement outcomes.”

This report by The Canadian Press was first published Sept. 29, 2026.

Jim Bronskill, The Canadian Press