A smarter regulatory approach to fraud prevention
Fraud schemes have continued to evolve in terms of their sophistication of delivery. The “Nigerian Prince” scams from the past still exist today with enhanced exploitation and delivery techniques through multi-channel digital and telecommunication methods. While payments have remained the monetization point for criminals in fraud schemes, the regulatory frameworks in place have not kept pace with fraudster innovation. Increasingly, fraud is no longer a payments problem but an ecosystem problem. Protecting Canadians from fraud requires a coordinated, cross-sector response. Fraud is not just a consumer protection issue; it is an economic issue. Fraud impacts on Canadian citizens and institutions are estimated to be up to $14B annually.1
This article is part of our Smarter regulation series, and was in consultation with the Canadian Anti-Scam Coalition (CASC)
Key takeaways
- While financial institutions have traditionally been a key focus for fraud detection and prevention, greater emphasis needs to be placed on the role of other sectors and jurisdictions in preventing, detecting, and responding to fraud as the origination point is often through digital and telecommunications channels.
- Existing regulatory frameworks remain largely sector-specific, creating coverage and accountability gaps that transnational organized fraud networks exploit.
- Canada can strengthen fraud outcomes through a lifecycle-based fraud strategy, a national multi-sector anti-fraud framework, and enhanced intelligence-sharing mechanisms.
- More effective fraud prevention measures can deliver significant economic benefits, with modelling suggesting that a 30 percent reduction in fraud losses could increase Canada’s real GDP by approximately $42 billion between 2027 and 2036 and support an average of 12,600 additional jobs annually through lower fraud-related losses, allowing households and businesses to retain and spend more of their income within the Canadian economy.
Fraud has risen significantly over the past decade and has evolved into sophisticated cross-sector attacks. Most often fraud originates on social media, is delivered through telecommunications channels, across jurisdictions, and ultimately moves funds through the financial system. In many cases, by the time a financial institution becomes involved, much of the fraud lifecycle has already occurred.
Fraudsters exploit the mismatch between sector-specific governance and cross-sector crime. Financial institutions, telecommunications providers, digital platforms, and regulators operate within distinct mandates, while organized fraud networks move across sectors and borders, exploiting gaps in visibility, accountability, and information sharing.
Recognition of this challenge is increasingly reflected in the work of th Financial Action Task Force (FATF)'s work. Recent FATF publications2 characterize fraud as a global and rapidly evolving threat, emphasizing that effective disruption depends on stronger public-private partnerships, faster intelligence sharing, and deeper cooperation across sectors and jurisdictions.
Why this matters to Canada’s economy and society
Fraud continues to grow globally in scale, sophistication, and impact, causing significant financial and emotional harm to Canadians, with $704 million in reported losses to the Canadian Anti-Fraud Centre (CAFC) in 2025,3 an approximately 326 percent increase from reported losses in 2020.4 Reported losses are dramatically under-reported with the CAFC estimating that only 5-10 percent5 of losses are reported. Actual losses are estimated to be up to $14B6 with these losses having a direct, broader economic impact, diverting funds that could otherwise support household financial security, investment, community services, and other productive uses in the Canadian economy. Organized crime is often behind the fraud, with these funds being used to support other illegal activities causing further harm.
Meanwhile, artificial intelligence and other technologies are enabling fraudsters to create more convincing social engineering attacks and perpetrate increasingly sophisticated frauds at scale across borders.
Fraud is not constrained by geography or regulation: activity may originate in one country and victimize consumers in another, increasing the complexity and sophistication of attacks.
Current regulatory and policy challenges
Five principles for smarter regulation
We are defining Smarter regulation as regulation and policies that strike the optimal balance of safeguarding Canadians while not stifling economic growth or investment.
In evaluating the design of both current and future regulations, we’ve defined five foundational principles:
Risk-based and proportionate
Calibrate regulations and policies to the impact and likelihood of the risk being addressed. Periodic reviews should be used to maintain alignment of regulation and risk as factors change.
Outcomes-focused
Design regulation to achieve desired safety or public interest outcomes. Avoid prescriptive rules or processes that don’t impact outcomes. Monitor achievement of outcomes and adapt as needed.
Transparent and predictable
Create clarity around the obligations and decision processes for the public and businesses. Both the timelines and the decisions themselves should be predictable to give public and businesses confidence.
Harmonized and coordinated
Reduce duplication across levels of government (federal and provincial), and align with trusted international standards. Break down domestic regulatory silos and fragmentation by implementing a customer experience lens.
Future-oriented
Enable businesses to test new products, services, or business models through appropriate regulatory pilot programs that manage risk while fostering innovation.
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Three recommendations to strengthen fraud outcomes
1. Establish a lifecycle-based fraud strategy
(Foundational principle(s): Risk-based and proportionate, Outcomes-focused)
The Government of Canada should adopt a lifecycle-based strategy covering origination, facilitation, execution, monetization, law enforcement and victim recovery. Modern schemes often begin on digital platforms, telecommunications networks, or through social engineering, well before funds move through the financial system.
A lifecycle-based approach would establish preventive obligations at origination, strengthen disruption during delivery, and preserve payment-layer controls as a final line of defense. It would create intervention opportunities at multiple stages, reducing the likelihood that fraud reaches consumers and limiting losses when it does. It would also enhance law enhancement efforts, decreasing Canada as a target of transnational criminal networks.
2. Implement a national multi-sector anti-fraud framework
(Foundational principle(s): Harmonized and coordinated)
The framework should initially focus on digital platforms, telecommunications providers, and financial services. Digital platforms can restrict fraudulent ads, impersonation, fake accounts, and deceptive content; telecommunications providers can reduce fraud delivered through calls, texts, spoofing, and SIM-related activity; and financial institutions can continue strengthening payment monitoring, customer warnings, and intervention mechanisms.
Together, these sectors span the fraud lifecycle and, through coordinated regulation, can prevent fraud from reaching consumers, disrupt activity before losses occur, and strengthen protections for Canadians.
Internationally, governments are expanding anti-fraud frameworks beyond banking to include telecommunications, digital platforms, and other sectors. Australia remains a leading example, with coordinated public-private initiatives such as the Australian Financial Crimes Exchange (AFCX) and oversight from the Australian Competition and Consumer Commission (ACCC). Importantly, the ACCC has led national consumer protection and anti-fraud efforts in Australia driving cross-sector fraud disruption. These efforts contributed to a decline in reported scam losses from A$3.1billion in 2022 to A$2.03 billion in 2024 (down 34.5 percent), with losses in 2025 remaining almost 30 percent below the 2022 peak despite a slight increase from 2024.8 The United States is also moving in this direction through the proposed SCAM Act,9 which would increase the role of digital platforms in scam prevention.
The Government of Canada should designate a central coordinating regulator, comparable to the ACCC in Australia, to provide cross-sector oversight, ensuring regulatory approaches are coordinated and complementary, and promote consistent, proportionate implementation. Existing sector-specific authorities would continue to supervise and enforce rules within their mandates, using established tools and expertise while avoiding duplication and promoting consistency across the broader regulatory framework.
Figure 1: Central Regulator Role
[Figure description:] The diagram shows a central coordinating regulator overseeing a multi-sector fraud prevention framework, while individual regulators continue to supervise and enforce rules within their own sectors.
3. Enable secure cross-sector intelligence sharing
(Foundational principle(s): Harmonized and coordinated, Future-oriented)
Regulatory oversight alone will not resolve fragmented visibility across the fraud ecosystem. Individual organizations, within each sector, see only part of the lifecycle, limiting their ability to identify broader patterns and coordinated criminal activity. While intelligence sharing between organizations within a sector (e.g. Financial Institutions, Telcos) happens it is not as mature as required to appropriately mitigate the risks.
Private-sector organizations are often first to detect fraud through customer interactions and internal controls. Timely information sharing between the private and public sectors and law enforcement agencies can support earlier disruption, protect victims, and limit organized and repeat cross-sector schemes.
The Government of Canada should clarify permissible disclosures between private to private and private to public, including risk-based thresholds for sharing information associated with suspicious activity, not only confirmed fraud. Greater consistency would support earlier detection and disruption before losses occur and facilitate timely sharing of actionable intelligence with law enforcement.
Clearer rules should be reinforced by safe-harbour protections for organizations that share information in good faith for legitimate fraud-prevention or victim-protection purposes, enabling more consistent engagement with law enforcement.
Australia provides a useful model through the AFCX Intelligence Loop,10 which enables near real-time sharing of scam indicators among financial institutions, telecommunications providers, digital platforms, and the National Anti-Scam Centre.
Canada can similarly expand intelligence sharing beyond financial services, building on emerging initiatives led by global platforms, including Meta and Google, to share fraud indicators, threat intelligence, and scam-related information.
Economic analysis and estimated impacts
Fraud imposes a significant economic cost on Canada, diverting household savings and business resources away from productive economic activity. In 2025 alone, fraud-related losses were estimated at up to $14 billion.11 Assuming the proposed policy and regulatory actions reduce fraud losses by 30 percent, our modelling estimates that Canada’s real GDP would increase by approximately $42 billion between 2027 and 2036 and support an annual average of 12,600 additional jobs over the same period. These gains stem from lower fraud-related losses, allowing households and businesses to retain and spend more of their income within the Canadian economy.
Actual outcomes will depend on implementation and compliance, and the estimates do not capture broader effects such as stronger consumer and business confidence or improved community well-being.
Measuring what matters in fraud prevention
The benefits of smarter fraud regulation will depend on effective, coordinated implementation across the full fraud lifecycle. Our modelling indicates potential economic value alongside broader societal benefits, including reduced consumer harm, stronger trust in digital and financial services, and improved confidence in online commerce.
Ultimately, success should not be measured by the number of transactions reviewed, accounts frozen, or fraud alerts generated. Success should be measured by whether fewer Canadians are deceived, fewer consumers are impacted by fraud, and fewer criminal networks are able to profit.
“Fraud is a cross-sector crime, yet Canada’s response remains largely siloed—and criminals know it. They exploit the seams between financial institutions, telecom providers, digital platforms, regulators, and law enforcement, because no single organization has a complete view. Strengthening regulatory coordination is one of the most impactful reforms we can make. The Canadian Anti-Scam Coalition is working to ensure Canada adopts a whole-of-ecosystem model that brings all key players together to pursue a shared goal: closing those gaps and better protecting Canadians.”
– Jennifer Quaid, Executive Director, CASC
