Mortgage fraud and money laundering are worsening despite new federal laws enacted in 2020, as stated by the cabinet.The Department of Finance unveiled new anti-fraud regulations that will come into effect on October 1, 2025, impacting realtors and title insurers, as reported by Blacklock’s Reporter.“The Canadian real estate market has been identified as a sector highly vulnerable to money laundering,” the department wrote in a Regulatory Impact Analysis Statement. “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,” it added.New regulations under the Proceeds of Crime and Terrorist Financing Act mandate that title insurers verify clients’ names, birthdates, and addresses. “Title insurers provide specialized insurance policies that insure residential or commercial property owners or their lenders against losses related to the property’s title or ownership,” wrote the finance department. “Although title insurance is not mandatory, many lenders require its purchase as part of the mortgage agreement. Therefore, title insurers are involved in most residential real estate transactions in Canada.”Regulations mandate that all realtors identify unrepresented parties or individuals acting without an agent under the threat of a $500,000 fine. However, enforcement was postponed until fall 2025 to provide businesses with sufficient time to prepare, as stated in the Analysis Statement.“Currently, real estate representatives are only required to take ‘reasonable measures’ to identify unrepresented parties,” wrote the finance department. “Despite the ‘reasonable measures’ approach, money laundering risks in the real estate sector continue to increase, as do reports relating to criminals’ use of the real estate sector for money laundering. Given these factors, the ‘reasonable measures’ approach needs to be strengthened.”Since regulations were introduced five years ago, realtors have been mandated to verify clients’ identities. These reforms responded to a 2019 report by the advocacy group Transparency International Canada, which highlighted concerns about “dirty money” in the real estate sector.“Vancouver is not the only Canadian target for criminals who want to hide dirty money in real estate,” said the report Opacity: Why Criminals Love Canadian Real Estate. “Data show billions of dollars in Greater Toronto Area housing has been acquired by anonymous owners using funds of unknown origin.”“We examined a decade’s worth of real estate transactions in the Greater Toronto Area and red-flagged $25 billion,” James Cohen, then-executive director at Transparency International, said in an earlier interview. Suspicious dealings included 1.3 million mortgages approved by unregulated private lenders and $9.8 billion in cash sales typically involving shell companies or “straw men,” he said.
