Canada's anti-money laundering agency, FINTRAC, has been criticized for its lack of serious action against money laundering in the real estate sector. In 2024, the agency issued only three administrative monetary penalties to real estate firms, all located in Toronto and Vancouver, and primarily for minor compliance issues. These penalties took up to three years to be enforced, raising concerns about the agency's commitment to addressing money laundering in real estate.
FINTRAC, responsible for enforcing the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, aims to reduce money laundering risks. To meet obligations set by the G7's Financial Action Task Force, Canada included real estate firms under FINTRAC's oversight. Despite this, the agency's enforcement actions in 2024 were limited to minor infractions, suggesting a lack of robust measures against illicit financial activities in the property market.
The three firms penalized were JLL in Toronto, Right At Home Realty in Toronto, and Masters Realty in West Vancouver. JLL received a fine of $107,800 for six violations, including inadequate documentation procedures. Right At Home Realty was fined $58,000 for three violations related to insufficient procedural documentation. Masters Realty faced an $83,700 fine for five violations, such as inadequate client identification records. These fines resulted from routine compliance audits conducted between 2021 and 2022.
Critics argue that FINTRAC's prolonged enforcement timelines and focus on minor compliance issues indicate a superficial approach to combating money laundering in real estate. The agency's limited actions contrast sharply with more stringent measures observed in other jurisdictions. For instance, TD Bank's compliance failures led to a $9.19 million fine in Canada, while in the United States, the same issues resulted in a $3 billion penalty and restrictions on the bank's growth.
In response to increasing scrutiny, Canada proposed new measures in December 2024 to strengthen FINTRAC's authority. The proposed changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act include significantly higher penalties, criminal offenses for false reporting, and enhanced coordination with other federal agencies overseeing the financial sector. These proposals aim to address criticisms of FINTRAC's lenient approach and prepare for an upcoming assessment by the Financial Action Task Force in 2025-2026.
Despite these proposed reforms, concerns persist about FINTRAC's effectiveness in tackling money laundering within Canada's real estate market. The agency's historical focus on minor infractions and delayed enforcement actions have led to calls for more proactive and comprehensive strategies to combat illicit financial activities in the property sector. As Canada approaches its evaluation by international anti-money laundering bodies, the effectiveness of these new measures remains to be seen.