Navigating Canada’s Expanding AML Framework in Real Estate and Lending

Canada’s anti-money laundering (AML) regime is undergoing a significant transformation, particularly in the real estate and mortgage sectors. These reforms span both provincial and federal levels, significantly expanding obligations for mortgage lenders, brokers and administrators. British Columbia’s Bill 29 and federal changes to the AML regime bring previously exempt participants into scope and introduce substantial compliance and enforcement measures.

Below is a breakdown of key developments and practical considerations for affected businesses.

1. Bill 29 Reform. The legislation replaces B.C.’s outdated Mortgage Brokers Act and introduces a modernized regime requiring registration and oversight of anyone providing mortgage services, including private lenders. Bill 29 responds directly to the recommendations of the Cullen Commission, which identified private lending as a key vulnerability in B.C.’s housing market.
2. Foreign Lender Impact. Foreign lenders may face new licensing obligations in B.C., even for single transactions. Although exemptions exist for certain institutions, foreign banks not governed under the Canadian Bank Act could fall outside those categories. The lack of finalized rules compounds this uncertainty, as the scope and process for registration remain undefined ahead of the Bill 29’s enforcement in October 2026.
3. Preparing for Compliance. Lenders should proactively consider using authorized collateral agents in B.C., ensure their disclosure materials are adaptable to B.C. requirements and monitor updates from the B.C. Financial Services Authority. These steps may reduce future compliance burdens once the licensing rules are released.
4. Federal AML Expansion. As of October 2024, the federal AML regime now includes mortgage brokers, administrators and lenders. This significant expansion aligns with B.C.’s changes, triggering AML obligations for entities newly subject to provincial registration.
5. New Obligations and Penalties. Obligations include risk assessments, know-your-client procedures, client monitoring, and suspicious transaction reporting. With forthcoming amendments under the Strong Borders Act, maximum penalties may rise to C$20-million, underscoring the urgency of robust compliance.

Have more than five minutes? Listen to our podcast episode on this topic or contact any Commercial Real Estate or Financial Services group member to learn more.