In the last year FinTRAC has announced 35 enforcement actions and, according to its website, almost a third of those were for realtors.JONATHAN HAYWARD/The Canadian Press
The latest monetary penalty imposed on a real estate brokerage by the federal government’s anti-money laundering regulator should serve as a wake-up call for realtors, according to experts.
Federal law requires real estate brokerages (among other financial services companies) to create anti-money laundering (AML) policies and procedures, identify their clients, keep records of their transactions and report anything suspicious to Financial Transactions and Reports Analysis Centre of Canada, or FinTRAC, as it is known.
However, even though Canada’s modern money-laundering regulations are more than 20 years old, there are still points of friction between owners and operators of real estate businesses and their compliance requirements. Canada has more than 155,000 real estate brokers, agents and salespeople, and more than 14,000 brokerage businesses, all subject to the regulations.
“They generally hate FinTRAC. They think it’s either government overreach or increased administrative burden,” said Greg Dent, who is both a realtor in British Columbia and co-founder and chief operating officer of ReallyTrusted Technologies Inc., a specialty software and training company that helps realtors get compliant with Canada’s AML rules. It has more than 900 brokerage clients across the country. “[They say] ‘It’s one more form that I have to fill out’ and you’ll hear different versions of that depending on where you are in the country.”
FinTRAC penalizes three organizations for alleged failures in financial crime controls
On July 9, FinTRAC announced that an Ottawa-area brokerage, VIP Realty Inc., also known as Royal LePage Integrity Realty Inc., had paid a $33,000 fine (initially levied in December, 2025) for failing to complete a prescribed review of its policies to prevent money laundering and terrorism financing every two years. While FinTRAC has included such penalties for failing to conduct policy audits in several previous instances where real estate brokerages had been assessed other fines, they had never been the sole violation before.
“The two-year reviews have always been – especially in the real estate space – kind of the forgotten piece of the compliance program,” said Adam Feldman, principal for risk management and technology at financial services consulting company The AML Shop. “They’re time-consuming; they’re expensive. A lot of brokerages just didn’t do them. You just can’t get away with that any more, and now you need to do those reviews.”
Lori Blair, senior communications adviser for FinTRAC, said in a statement that the agency had ramped up its enforcement efforts in recent years.
“A prescribed review is important to determine whether a compliance program has gaps or weaknesses that may prevent a business from effectively detecting and preventing money laundering, terrorist activity financing and sanctions evasion,” Ms. Blair said in her statement.
“These obligations help deter criminals and terrorists from using Canada’s financial system to launder the proceeds of their crimes, finance terrorist activities or evade sanctions. They also ensure that FinTRAC receives the information that it needs to generate actionable financial intelligence in support of the investigations of Canada’s law enforcement and national security agencies and international allies,” she said.
Ontario real estate agents report fewer large cash transactions to FinTRAC
In addition to real estate companies, FinTRAC regulates many enterprises that deal with capital flows, including cryptocurrency enterprises, jewellers, lottery and gaming organizations, and money services companies.
In the last year FinTRAC has announced 35 enforcement actions and, according to its website, almost a third of those were for realtors, accounting for more than $770,000 in fines, which represents less than 0.5 per cent of the fines in that period.
While FinTRAC’s mission is a serious one, Mr. Dent often finds there are business and sometimes attitudinal reasons why most real estate brokerages in the country struggle with counterterrorism and money-laundering regulations.
“The structure of the industry is poorly designed for success,” said Mr. Dent, noting real estate brokerages across Canada are mainly small businesses with a sole owner-operator and between 35 and 100 realtors. “Most of the broker-owners who own those businesses got there because they were good real estate agents, not because they have some sort of deep passion around administration or compliance issues.”
There’s also confusion in the industry about how these reviews are to be conducted, who is qualified to do them and how expensive they should be.
“I speak to brokerages all the time,” said Friedrich Klaus, co-Founder of Iluminai Intelligence Corp., which makes AML compliance software that it sells to realtors and mortgage brokers. He often hears from his clients about the wild range of prices they receive for completing the reviews. Mr. Klaus described a brokerage in Edmonton that received a quote for $16,000 from a small specialty AML consultancy to do the biennial review, about the same price that a major accounting firm might charge. After negotiations, the brokerage finally got the company to reduce their price: “They just kept cutting until it was $3,000,” he said.
The current regulations are also loose when it comes to who is qualified to conduct these reviews. “You’re allowed to audit your own program if you want,” said Mr. Dent, but he doesn’t encourage broker-owners to be their own auditor if they aren’t certain of the rules.
“I think those might be holes that FinTRAC eventually closes,” said Mr. Dent. “But for now, that is still allowed.”