Expert says government tolerates money laundering because it boosts real estate, banking, and tax revenues
Despite years of political promises to crack down on money laundering, Canada remains a major hub for illicit financial activity – and that may not be an accident.
Canadian governments have little incentive to take meaningful action because dirty money ultimately benefits the economy, according to University of Calgary law professor Sanaa Ahmed.
In a chapter from her newly released book Dirty Money: Financial Crime in Canada, Ahmed argues that while money laundering is a major financial crime, it also acts as an economic booster, fuelling industries such as real estate, banking, and luxury goods.
"Once we put the moral outrage aside about this, money is just money," she wrote.
Money laundering has been a persistent issue in Canada, with estimates suggesting between $40 billion and $130 billion is laundered annually. The real estate industry, in particular, has been a key entry point for illicit funds.
A 2023 report by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) found that 61 out of 71 real estate firms audited failed to comply with anti-money laundering regulations, with nearly half failing to meet basic client identification requirements.
Ahmed’s research suggests that authorities tolerate this activity because the economic benefits outweigh the risks.
"The billions of illicit dollars that have poured into Canada help shore up the domestic economy," she stated, noting that money laundering supports banks, developers, real estate professionals, luxury retailers, and even government tax revenues.
The professor also pointed to Canada’s immigration policies, which she says have encouraged the inflow of unverified wealth. Economic immigration programs at the federal and provincial levels attract foreign nationals with capital, but Ahmed argues that there are no serious requirements to verify the source of these funds.
"The cleanliness of the money has not been a priority for the Canadian state," she noted.
The ‘Vancouver model’
Money laundering has played a significant role in Canada’s housing market, particularly in British Columbia. A decade ago, the so-called “Vancouver Model” allowed drug money to be funnelled into casinos and luxury real estate, with little intervention from authorities.
Ahmed questions why it took American regulators, not Canadian ones, to impose a $3 billion fine on TD Bank for its role in laundering drug money through US branches.
Despite efforts like the Cullen Commission – a 1,800-page investigation into money laundering in BC – little has changed. The report concluded that billions of illicit dollars flowed through BC real estate and casinos, but the government has yet to implement key recommendations, such as creating a dedicated financial crimes police unit.
The issue is also drawing international scrutiny. Both former US president Joe Biden and current president Donald Trump have criticized Canada’s weak anti-money laundering enforcement, with Trump pressuring the country to tighten controls on illicit financial flows.
Read next: Canada's anti-money laundering penalties to increase 40x under new rules
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