A bad grade threatens billions in investment and business connectivity
Canada's standing in the global financial system hinges on how it performs in a critical peer review this year, according to CPA Canada.
The Financial Action Task Force, the international money laundering and terrorist financing watchdog, is conducting a sweeping assessment of Canada's anti-money laundering regime in 2025, with an on-site visit scheduled for November.
The stakes extend far beyond compliance: countries classified as high-risk jurisdictions face severe impacts on their economy, investment, and the ability of their businesses to connect with the international financial sector.
The FATF operates a two-tier penalty system that carries real economic weight.
Nations found to have significantly lacking anti-money laundering and anti-terrorist financing regimes receive nomination to a FATF grey list.
Those that fail to improve can move to a blacklist.
Being designated a high-risk jurisdiction creates barriers that ripple through financial markets and investment flows.
All countries undergo this scrutiny every six to eight years.
The review assesses how well a country's laws comply with FATF regulations and recommendations, according to Department of Finance officials.
Canada's review encompasses federal departments, many provincial departments, several private-sector stakeholders, and certain not-for-profit agencies connected to the financial sector.
Crucially, the assessment examines not just the country's legislative and regulatory framework, but also the outcomes and actions it delivers in the global fight against money laundering and terrorist financing.
The 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, known as the National Risk Assessment, serves as a key information source for this evaluation.
New technologies have created fresh pathways for money laundering, and criminals consistently target the weakest points in a chain.
“The weakest link usually is people,” according to José Hernandez, co-founder and CEO of Ortus Strategies based in Zurich.
Professionals sometimes focus on whether a transaction succeeds rather than examining its quality—specifically where the money originates and its intended purpose.
As cryptocurrency gains wider acceptance, finance professionals need practical knowledge on managing it.
Hernandez pointed to a critical red flag: a customer claiming activity in one geographic region while requesting payment from funds in another, particularly when a tax haven is involved.
When a transaction is complex or unusual—such as when an unfamiliar virtual asset is involved—additional due diligence becomes necessary.
“Do not forget the limitations of technology and never underestimate the importance of human beings with institutional knowledge bringing it forward,” Hernandez said.
Establishing whistleblower channels offers one avenue to address suspicious activity.
“Sometimes the simplest of tools or efforts can go a long way,” he emphasized.
Because money launderers work to avoid transparency, heightened vigilance during unusual transactions remains essential.
