FATF Status

Canada is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Canada was undertaken in 2021. According to that Evaluation, Canada was deemed Compliant for 11 and Largely Compliant for 23 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 5 of the Effectiveness & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Canada is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

Money laundering in Canada involves the proceeds of illegal drug trafficking, fraud, corruption, counterfeiting and piracy, and tobacco smuggling and trafficking, among others.  Foreign generated proceeds of crime are laundered in Canada, and professional, third-party money laundering is a significant concern.  Transnational organized crime groups and professional money launderers are key threat actors

Canada has made progress in addressing money laundering deficiencies.  Canada is working toward addressing remaining deficient areas, including virtual currencies, beneficial ownership, customer due diligence (CDD), and information sharing, with additional budget allocations and strengthened interagency cooperation.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          76

World Governance Indicator – Control of Corruption             93

Corruption does not represent a substantial obstacle to doing business in Canada. The country possesses clear-cut regulations and transparent, reliable courts. Numerous corruption investigations raise concern about corruption, illegal financing and kickbacks in the construction sector and in public procurement. Nevertheless, the government has well-functioning mechanisms in place to investigate and punish corruption and abuse of office. The Criminal Code of Canada is the principal anti-corruption legislation, prohibiting corruption, bribery, influence peddling, extortion and abuse of office. Facilitation payments, gift-giving and foreign bribery are criminalized under the Corruption of Foreign Public Officials Act (CFPOA) and are uncommon in practice. The law’s extended jurisdiction permits Canadian courts to prosecute corruption committed by companies and individuals abroad. Canada's anti-corruption legislation is vigorously enforced, and companies and officials guilty of violating Canadian law are being effectively investigated, prosecuted and convicted. For further information - GAN Integrity Business Anti-Corruption Portal

Canada and the United States have one of the largest and most comprehensive investment relationships in the world. U.S. investors are attracted to Canada’s strong economic fundamentals, proximity to the U.S. market, highly skilled work force, and abundant resources. Canada encourages foreign direct investment (FDI) by promoting stability, global market access, and infrastructure. The United States is Canada’s largest investor, accounting for 46 percent of total FDI. As of 2021, the amount of U.S. FDI totaled USD 406 billion. Canada’s FDI stock in the United States totaled USD 528 billion.

Canada averaged an inflation rate of 6.8 percent in 2022, a 40-year high, though inflation decelerated steadily in late 2022 and early 2023. The high rate was attributed in part to increased energy, food, and commodity prices resulting from Russia’s war of aggression against Ukraine.

The United States-Mexico-Canada Agreement (USMCA) came into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA). The USMCA supports a strong investment framework beneficial to U.S. investors. Foreign investment in Canada is regulated by the Investment Canada Act (ICA). The purpose of the ICA is to review significant foreign investments to ensure they provide an economic net benefit and do not harm national security. In October 2022, the Canadian government issued a new policy under the ICA to significantly restrict investments in Canada’s critical minerals sector and critical minerals supply chains by foreign State-Owned Enterprises (SOEs) and private investors with close ties to foreign governments. In December 2022, the Canadian government introduced legislation to modernize the ICA.

Despite a generally welcoming foreign investment environment, Canada maintains foreign investment prohibitions in the residential real estate, telecommunication, airline, banking, and cultural sectors. A two-year prohibition on the purchase of residential property by non-Canadians came into force on January 1, 2023. The prohibition follows the implementation of the Underused Housing Tax in 2022. Ownership and corporate board restrictions prevent significant foreign telecommunication and aviation investment, and there are deposit acceptance limitations for foreign banks. Investments in cultural industries such as book publishing are required to be compatible with national cultural policies and be of net benefit to Canada. In addition, non-tariff barriers to trade across provinces and territories contribute to structural issues that have held back the productivity and competitiveness of Canada’s business sector.

Canada has taken steps to address the climate crisis by establishing the Canadian Net-Zero Emissions Accountability Act that enshrines in law the Government of Canada’s commitment to achieve net-zero greenhouse gas emissions by 2050 and issuing the 2030 Emissions Reduction Plan that describes the measures Canada is undertaking to reduce emissions to 40 to 45 percent below 2005 levels by 2030 and achieve net-zero emissions by 2050. Canada announced USD 61 billion in tax credits for investments in clean electricity, clean tech manufacturing, carbon capture, hydrogen, and critical minerals.

Country Links

Office of the Superintendent of Financial Institutions

Financial Transactions and Reports Analysis Centre of Canada (FINTRAC - CANAFE)

Detailed company search - Canadian Company

Canadian Securities Administrators (CSA)

Investment Industry Regulatory Organization of Canada (IIROC)

Mutual Fund Dealers Association (MFDA)

Ontario Securities Commission (OSC)

Financial Services Commission of Ontario

Autorité des marchés financiers (Québec)

British Columbia Securities Commission (BCSC)

Financial Institutions Commission - Province of British Columbia