Canada’s real estate sector is increasingly targeted by fraudsters and money launderers, according to a government analysis. In response, the federal finance department has outlined new anti-fraud regulations for realtors and title insurers, set to take effect on Oct. 1, 2025.
“Fraud, a well-known predicate crime to money laundering, is on the rise in the real estate sector, with increased reporting of criminals using title fraud to steal ownership of a home to benefit from its value,” stated the Regulatory Impact Analysis Statement, published in the
Canada Gazette on Jan. 1 and first covered by
Blacklock’s Reporter.
The finance department recently introduced
new rules under the Proceeds of Crime and Terrorist Financing Act to address money laundering and terrorist financing risks in the real estate sector. These include requiring title insurers to
verify clients’ names, dates of birth, and addresses.
Title insurers provide specialized policies that protect property owners and lenders against losses related to a property’s ownership or title. While not mandatory, many lenders require title insurance as part of mortgage agreements, making title insurers involved in most residential transactions, the analysis said.
Additionally, the new rules
mandate real estate representatives identify unrepresented parties, determine whether any third parties are involved in transactions, and maintain records of the associated information. The analysis pointed out that current regulations only require real estate representatives to take “reasonable measures” to identify unrepresented parties who are not working with a real estate agent.
“Despite the reasonable measures approach, money laundering risks in the real estate sector continue to increase, as do reports relating to criminal’s use of the real estate sector for money laundering,” said the analysis. “Given these factors, the ’reasonable measures’ approach needs to be strengthened to better detect and deter money laundering in the real estate sector.”
Violations could result in fines of up to $500,000. Enforcement has been delayed until the fall of 2025 to allow businesses time to prepare, according to the analysis statement.
Realtors have already been required to verify client identities under regulations introduced five years ago. These reforms followed a
2019 report by advocacy group Transparency International Canada, which raised concerns about “dirty money” in real estate.
The advocacy group
noted that between 2008 and 2018, over $28 billion in real estate transactions occurred through companies in the Greater Toronto Area, many of which had unknown ownership. Additionally, more than $25 billion in transactions were carried out through unregulated lending services. While these transaction methods are legal, they pose a significant risk for money laundering in the GTA, it said.
