Canada’s AML framework shows stronger coordination, financial intelligence and transparency, but gaps remain in supervision, prosecutions and asset recovery. The FATF/APG review calls for further action on complex money laundering cases, beneficial ownership and higher-risk sectors.

Canada’s 2026 mutual evaluation highlights a financial crime framework that has developed considerably since the country’s previous assessment. Authorities have strengthened their understanding of money laundering and terrorist financing threats, supported by national risk assessments and greater coordination across agencies. Drug trafficking, fraud, tax offences and trade-related crime remain important sources of illicit proceeds, with organised criminal networks and professional money laundering operations adding complexity to enforcement efforts.

The assessment also identifies progress in supervision, financial intelligence and beneficial ownership transparency. FINTRAC has expanded its risk-based approach and continues to provide intelligence used in investigations involving serious financial and predicate crimes. Canada has also improved authorities’ access to information about the individuals who ultimately own or control companies. At the same time, implementation is not consistent across provinces and territories, while supervisory coverage and intensity do not always correspond with the risks facing particular sectors. Real estate and dealers in precious metals and stones are among the areas where vulnerabilities remain.

Investigative capabilities are another area of relative strength, with financial investigations increasingly integrated into major law-enforcement cases. However, converting sophisticated investigations into successful prosecutions remains challenging, particularly where professional money launderers operate independently from the underlying criminal activity. Asset recovery has similarly received greater attention and dedicated resources, but legal and operational limitations continue to restrict authorities’ ability to restrain and confiscate criminal proceeds in complex cases. Mechanisms for recovering equivalent-value property when the original proceeds are unavailable also remain limited.

Canada’s framework for terrorist financing and proliferation financing is comparatively well established. Authorities have mechanisms to identify and investigate terrorist financing, while targeted financial sanctions related to proliferation financing can be implemented without delay. Financial institutions and virtual asset service providers generally demonstrate stronger awareness of these obligations, although understanding across some non-financial businesses and professions is less consistent. International cooperation is supported by an extensive legal and treaty framework, but delays in mutual legal assistance and cross-border asset recovery can reduce its practical effectiveness.

Canada will now be expected to address a series of recommended actions over the coming three years. Priorities include making supervision more consistently risk-based, extending effective oversight of higher-risk non-financial sectors, advancing a coordinated nationwide beneficial ownership framework, increasing attention to complex and standalone money laundering prosecutions, and strengthening asset recovery. Canada has been placed in regular follow-up and will report on progress as these reforms are implemented.

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Originally published on Canadian Fraud News.