The Finance Department says mortgage fraud and money laundering are getting worse in Canada as delayed new laws are set to take effect on Oct. 1, 2025 affecting realtors and title insurers, reports Blacklock’s Reporter.
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“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.”
The Proceeds Of Crime And Terrorist Financing Act’s new rules require title insurers verify clients’ names, dates of birth 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 also require realtors identify anyone acting without an agent — known as unrepresented parties — or face the threat of $500,000 fines. Enforcement was delayed to this fall so businesses could prepare.
“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.”
Realtors are already required to verify the identity of clients under 2020 regulations introduced after a 2019 report by the advocacy group Transparency International Canada complained of “dirty money” in Vancouver and Greater Toronto Area real estate.