Five ways to strengthen Canada’s anti-money-laundering outcomes

The case for smarter AML regulation

Canada's AML framework has expanded significantly over the past two decades, yet reform has largely occurred through the addition of new requirements rather than a comprehensive review of the regime. Compliance obligations have become increasingly prescriptive and, at the same time, limitations remain across the broader legislative and regulatory ecosystem. 

As a result, the regime has increasingly prioritized technical compliance and reporting activity over desired outcomes, such as generating actionable intelligence, prosecuting bad actors, and recovering criminal proceeds. Available data shows that less than 7 percent of individual money laundering charges resulted in a guilty verdict and federal forfeitures tied to money laundering charges totaled only $3.2 million (less than 0.01 percent) over the same period.¹

Consequently, the cost of compliance is substantial (approximately $2 billion annually) and rising, with minimal return on investment. These costs are borne primarily by the financial sector and represent resources that could accelerate innovation and strengthen risk mitigation. To address these dynamics, Canada needs a greater shift toward regulatory effort that delivers the desired results: generating better intelligence and improving enforcement and asset recovery outcomes. Achieving these outcomes will require a more risk-based and coordinated approach that directs resources toward the areas of highest risk and impact. 

This paper identifies key challenges to AML effectiveness and proposes targeted reforms to address them, while quantifying the economic opportunity of reducing financial crime and the broader benefits for economic growth.

Why this matters to Canada’s economy and society

An estimated $113 billion is laundered through the Canadian economy each year, a figure that is equivalent to around 3.5 percent of Canada’s GDP, and that is likely understated as money laundering is inherently difficult to quantify.²

Money laundering causes significant societal harm. By concealing proceeds from drug and human trafficking, fraud, and organized crime, it sustains criminal activity that is detrimental to individuals and communities.

The movement of criminal proceeds also causes material economic harm. It distorts markets, increases pressure on real estate and other assets, displaces legitimate investment, and undermines confidence in Canada’s economy. Over time, these harms can raise the cost of capital, deter investment, and weaken economic growth.

Smarter AML regulation will improve the detection and disruption of illicit activity and ultimately reduce the societal and economic harms of money laundering. These outcomes advance Canada's priorities to strengthen public safety, protect market integrity, and support long-term economic growth.

Regulatory and policy challenges

Challenge 1: Fragmented information limits intelligence and detection

While Canada has made progress in enabling private-to-private AML information sharing, financial crime information remains fragmented across financial institutions, law enforcement, and government agencies. This is partly due to the absence of clear safe harbour provisions at the federal level to cover liability risks presented by provincial laws, and clear statutory authority for the collection, use, and disclosure of information between public and private sectors. Within the private sector, access-to-information rights may also increase the risk of tipping off criminals or exposing investigative methodologies. These constraints create legal uncertainty and limit collaboration, making it harder to generate timely intelligence, connect suspicious activity, and identify criminal networks.

In addition, access to beneficial ownership information differs across Canada. Provincial and territorial approaches vary in maturity, with disparate rules and approaches to public access. This patchwork approach makes it difficult to form a reliable, cross-jurisdictional picture of who ultimately owns or controls assets used to conceal illicit funds.

Challenge 2: More reporting is not producing better intelligence

The AML regime has largely evolved through the addition of rules and reporting obligations without delivering commensurate intelligence and enforcement outcomes, despite substantial investment in compliance efforts. In 2024–2025, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) received approximately 65.1 million regulatory reports but contributed to 2,730 unique disclosures and issued 6,236 financial intelligence disclosure packages, equivalent to less than 0.01 percent.³

Reporting entities are required to report each transaction related to the same pattern of suspicious activity, which can result in the submission of thousands of transactions. In some cases, individual filings can require approximately 500 data elements, creating significant effort for reporting entities, FINTRAC, and law enforcement. This consumes resources that could otherwise be directed toward generating the actionable intelligence needed to identify and disrupt criminal activity.

A further indication that AML regulatory requirements are not sufficiently calibrated to risk is the lack of coverage for higher risk sectors such as the legal profession. Lawyers continue to remain outside Canada’s primary AML legislative framework despite involvement in certain activities, such as facilitating real estate transactions that can present elevated money laundering and terrorist financing risks.

Challenge 3: Asset recovery remains disproportionately low

Canada’s asset recovery tools fail to produce outcomes proportionate to the scale of the problem. 

British Columbia, which operates one of the country's more active civil forfeiture regimes, has recovered approximately $207 million since 2006, while recent annual civil forfeitures in Ontario ranged from $1.6 million to $3.2 million (equivalent to less than 0.2 percent of the total amount laundered through the Canadian economy each year).⁴

An underlying cause is fragmentation across the asset recovery regime, with each province operating under its own legislation, thresholds and approach to tools such as unexplained wealth orders. Such inconsistencies facilitate jurisdictional arbitrage and enable criminals to exploit differences in provincial enforcement regimes (e.g., thresholds, success rates, and willingness to pursue cases) by moving assets across borders.

Five recommendations to strengthen AML outcomes

Recommendation 1. Focus suspicious transaction reporting on behaviour and risk (Foundational principle(s): Risk-based and proportionate)

There is an opportunity to modernize the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) by streamlining obligations that generate limited intelligence or risk mitigation value while strengthening efforts in areas that present the greatest money laundering exposure.

A key amendment would be transforming suspicious transaction reporting from a prescriptive transaction-level model to a more risk-based approach. This involves introducing greater flexibility through materiality-based thresholds, summarized transaction information, and representative samples instead of reporting every transaction. This could be complemented by a reduction in prescribed reporting data elements most useful to law enforcement, similar to Australia’s reporting model.

Resources can then concentrate on higher-value activity while preserving investigative utility. This direction is consistent with the Financial Action Task Force (FATF) risk-based approach and with reforms proposed in the United States and adopted in the United Kingdom, which have increasingly prioritized the quality, speed, and usefulness of information provided to law enforcement.

Modernization should also address high-risk professions that remain outside of the AML obligations under the PCMLTFA. The federal government’s 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada identifies lawyers and Quebec notaries as having high inherent vulnerability to money laundering and terrorist financing.⁵ Lawyers can act as gatekeepers through their role in creating legal entities, holding funds in trust, and facilitating real estate transactions, which are activities that can be exploited to conceal and move illicit funds. Bringing lawyers within the scope of the PCMLTFA through a constitutionally compliant framework, consistent with FATF standards and practices, would help close a notable vulnerability in Canada's AML framework.

Recommendation 2. Strengthen and harmonize asset recovery tools (Foundational principle(s): Outcomes-focused, Harmonized and coordinated)

Canada should move toward a harmonized national framework for unexplained wealth for cases in which significant assets appear disproportionate to an individual's known or declared lawful income. An unexplained wealth order (UWO) would require the asset holder to account for the legitimate origin of that wealth. Where a satisfactory explanation is not provided, the information obtained could support civil forfeiture without a criminal conviction.

British Columbia and Manitoba have already introduced unexplained wealth orders, while Ontario is exploring the feasibility of implementing this legal tool, providing a foundation for a consistent national approach. Adopting common standards across jurisdictions and reinforcing them with stronger information-sharing between agencies would give authorities a consistent basis for pursuing assets that conviction-based tools cannot reach.

A further step would be to amend the Seized Property Management Act and its regulations to direct a defined portion of forfeited proceeds back to the agencies responsible for investigating and recovering those assets after legal proceedings have concluded. This would provide a formal mechanism to secure the resources and specialized capabilities required in complex cases. 

Recommendation 3. Establish an integrated national intelligence sharing framework (Foundational principle(s): Harmonized and coordinated)

Canada should build on existing legal mechanisms that allow reporting entities to share relevant information with each other for AML purposes. There is an opportunity to establish legal authorities that allow reporting entities and government stakeholders to exchange information at an earlier stage, while maintaining appropriate privacy and confidentiality protections. This includes the sharing of tactical intelligence from FINTRAC and law enforcement to reporting entities to support better risk-alignment of AML programs and strengthen detection capabilities in accordance with national financial crime priorities.

A more permissive information-sharing framework would enable public and private sector participants to identify patterns, networks, and risks that are not visible through individual datasets. It would create the conditions for shared analytical capabilities, including sector-wide utilities, that generate stronger intelligence and support earlier detection, investigation, and prosecution of financial crime.

As the Financial Crimes Agency’s mandate and capabilities develop, there is an opportunity for it to assume an active role in coordinating the operational response to financial crime, including information sharing efforts among public and private sector participants across the regime.

Recommendation 4. Establish clearer legal pathways for public-private information sharing (Foundational principle(s): Transparent and predictable, Harmonized and coordinated)

Organizations need greater certainty regarding what information may be collected, used, and shared in support of money-laundering/terrorist financing detection and investigation. The effective exchange of information for AML purposes requires explicit legislative authorities and exceptions within AML and privacy laws. Expanded safe harbour protections would provide clear and consistent immunity for good-faith two-way public-private and private-to-private information sharing across federal and provincial jurisdictions, while stronger confidentiality protections would safeguard sensitive intelligence and investigative disclosures.

Additionally, consideration should be given to establishing a legislative framework that enables reporting entities to share relevant intelligence with law enforcement prior to the issuance of a production order, facilitating earlier intervention and disruption of criminal activity.

The Income Tax Act should also be amended to create a clearer pathway for the Canada Revenue Agency to share pertinent taxpayer information, including beneficial ownership information relating to trusts, with FINTRAC and law enforcement to combat money laundering linked to tax evasion.

A clear statutory framework should be established to enable the Financial Crimes Agency, Royal Canadian Mounted Police and other federal agencies to disclose personal information with provincial and municipal police for defined investigation and enforcement purposes, including serious and organized crime, human trafficking, major drug trafficking, and tax evasion, without requiring case-by-case reliance on the Privacy Act. Corresponding amendments to provincial privacy laws would support coordination with civil forfeiture offices.

Recommendation 5. Improve beneficial ownership transparency (Foundational principle(s): Risk-based and proportionate, Harmonized and coordinated) 

Criminals can hide illicit funds behind corporations, nominees, and other ownership structures when information about who ultimately owns and controls those assets is fragmented or difficult to access. Canada needs a more cohesive national framework for beneficial ownership transparency. Coverage should extend beyond corporations to include non-corporate structures such as partnerships and real property, while improving access to information across provinces and territories.

British Columbia's Land Owner Transparency Registry offers a useful model for real property, while the Registre des entreprises du Québec provides an example for corporate ownership. Applying similar reporting requirements nationally, supported by interoperability between federal and provincial registries and common data standards, would provide law enforcement, FINTRAC, and reporting entities greater visibility into ownership structures. As Ontario intends to launch a centralized beneficial ownership registry for privately held corporations in 2027, consideration should be given to aligning it with federal standards.

Economic analysis and estimated impacts

The money laundering activity in Canada currently amounts to approximately $113 billion annually. Assuming the proposed AML regulations reduce money laundering activity by 30%, our modelling shows this would increase Canada’s real GDP by $216 billion (expressed in 2017 prices) between 2027 and 2036 and support an annual average of 67,000 additional jobs across the economy over that period.⁷ These gains reflect the economic benefits that can arise when financial resources are redirected from illicit activities toward productive uses. 

We estimate the impacts through two channels:

•  First, reduced tax evasion increases government tax revenues, which are assumed to be invested in public infrastructure.

• Second, a decrease in money laundering leads to a more efficient allocation of capital in the economy, resulting in more productive use of capital, higher economic returns and higher productivity.

Measuring what matters to AML

The economic benefits of smarter AML regulation will ultimately depend on how effectively the proposed reforms are implemented and put into practice.

Our modelling suggests smarter AML regulation has the potential to generate significant economic value while delivering broader societal benefits, including lower levels of crime and corruption, stronger trust in institutions, enhanced community well-being, and a more attractive environment for investment.

Ultimately, success should not be measured by the volume of reports filed or the extent of compliance activity undertaken, but by whether the regime achieves its intended outcomes: identifying bad actors, disrupting criminal networks, recovering illicit proceeds, and protecting Canada's economy and society.