Canada’s Real-Estate Brokerages Face Intensifying FINTRAC Scrutiny Amid Rising AML Penalties

Real-estate brokerages across Canada are confronting heightened oversight from FINTRAC under the expanding anti-money-laundering framework, and five recent enforcement actions illustrate how gaps in anti-money-laundering real estate compliance can quickly translate into significant sanctions. With real-estate brokerage AML duties now squarely in regulators’ focus, and each decision carrying a defined Canada AML penalty, the following report examines each case in detail, highlighting the specific laundering-risk failures and the implications for AML/CFT professionals.

The first matter examined involves 9321-0599 Québec Inc., operating as Les Immeubles Star / Star Realty in Brossard, Québec. On July 2, 2025, FINTRAC levied a CAD 23,100 administrative penalty for two violations identified during a compliance review: the brokerage had not established or maintained written compliance procedures approved by a senior officer, and it had failed to “assess and document the risk of a money-laundering or terrorist-financing offence by taking into consideration the prescribed factors.” From an AML standpoint, this missing risk assessment represented a foundational lapse. Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its Regulations, real-estate brokerages must evaluate exposure by examining their products, client base, locations and methods of delivery. Without this step, detection, monitoring and reporting systems become ineffective. Although the financial sanction is modest, it reinforces that even small firms must meet baseline expectations. The brokerage’s appeal to the Federal Court signals the rising significance of these obligations.

The second case concerns HomeLife New World Realty Inc., with offices in Toronto and Richmond Hill. On May 21, 2025, the brokerage received a CAD 36,135 penalty for several types of non-compliance: the absence of current written policies approved by senior officers; the failure to assess and record ML/TF risk using prescribed factors; and failure to maintain required documentation for receipt of funds and client details such as occupation or full address. The examination revealed that in 19 of 50 transactions, there was no proof of ongoing monitoring, and in 14 of 50, mandatory client information was missing. Additionally, PEP/HIO controls were not applied consistently. These weaknesses create a fertile environment for money-laundering, especially in real-estate transactions involving large sums and international buyers. The lack of documented monitoring and incomplete client data undermine traceability and elevate the likelihood that illicit funds can pass through the brokerage undetected.

A third enforcement action targeted Pacesetter Marketing Ltd., a Vancouver-based brokerage, which was assessed a CAD 41,085 penalty on June 24, 2025. FINTRAC found that Pacesetter had failed to document essential components of its compliance structure, including client identification, business-relationship and ongoing monitoring procedures, beneficial ownership processes, PEP/HIO screening and compliance with ministerial directives. Its risk assessment consisted merely of a template lacking meaningful analysis, and it did not complete the mandatory biennial program review. In money-laundering terms, such superficial documentation provides no insight into the unique risk characteristics of Vancouver’s real-estate market, which features high-value transactions, complex ownership structures and foreign-investor activity. Without a substantive assessment or periodic review, controls cannot be calibrated to actual risks, leaving the brokerage vulnerable.

The fourth and most serious case concerns 1135233 B.C. Ltd., trading as LeHomes Realty Premier, also operating in Vancouver. FINTRAC issued a CAD 149,886 penalty for failures including: not submitting a suspicious transaction report despite “reasonable grounds to suspect transactions were related to money-laundering or terrorist-financing offences”; not appointing a compliance officer; not developing and updating policies; not assessing and documenting ML/TF risk; and incomplete client identification records. A violation classified as “Very Serious” involved transactions where customers attempted to avoid documentation, transactions inconsistent with apparent financial capacity, and activity involving individuals from areas of concern with weak AML controls. This case stands out because the brokerage missed clear red flags and failed to file an STR—the cornerstone of AML enforcement. Real estate is frequently exploited for laundering through mispriced transactions, hidden ownership, opaque funding and shell structures. By not recognising or reporting suspicious patterns, LeHomes effectively opened the door for illicit proceeds to enter the legitimate market. The size of the penalty reflects the gravity of these failings.

The fifth case focuses on Houston & Associates Realty Ltd., also known as HoustonRealty.ca, operating in Calgary. On May 29, 2025, FINTRAC imposed a CAD 117,975 penalty, citing failures to implement tailored compliance policies approved by a senior officer, failure to assess and record ML/TF risk, failure to maintain a structured training program, failure to conduct and document the required compliance review and failure to keep mandated records related to receipt of funds—specifically, account numbers were missing in all 10 sampled files. These lapses, classified as both “Serious” and “Minor,” reveal why a comprehensive AML structure is essential. Without training, staff miss red flags; without defined procedures, controls are inconsistently applied; without program reviews, weaknesses go uncorrected; and without basic record-keeping, tracing transactions becomes impossible. Calgary’s real-estate environment includes high-value properties, third-party payments and cross-border clients, all of which pose heightened AML risks when controls are insufficient. The penalty reinforces that robust compliance is non-negotiable.

Across all five enforcement actions, consistent themes emerge. The central message for AML/CFT practitioners is that the real-estate sector’s exposure to laundering is significant, and anti-money-laundering real estate compliance must be designed with this exposure in mind. Four cases involved fundamental failures in risk assessment, demonstrating that without a business-specific understanding of ML/TF risks, monitoring becomes reactive and ineffective. Obligations around monitoring and reporting were also repeatedly breached, including the serious failure to file an STR. In addition, the absence of proper training, missing independent reviews, and deficient record-keeping erode the ability to reconstruct transaction flows or demonstrate compliance during audits. Penalties varied from CAD 23,100 to CAD 149,886, illustrating how the severity of the control breakdown and the presence of suspicious indicators dictate sanction size. The geographical distribution—Québec, Ontario, British Columbia and Alberta—shows this is a nationwide issue affecting brokerages regardless of market segment.

These findings appear alongside ongoing regulatory change. Amendments to the PCMLTFA and its Regulations continue to broaden the scope of reporting entities, elevate risk-based expectations and strengthen enforcement tools. With increased penalties and new reporting obligations, brokerages cannot rely on outdated or minimalistic compliance practices. They must adopt frameworks aligned with those expected of financial institutions: bespoke risk assessments, ongoing monitoring, suspicious-transaction reporting, structured training, regular independent programme reviews and robust documentation. Regulators are making clear that the absence of adequate controls—even without proven laundering proceeds—is enough to justify sanction.

The cases also show that governance is crucial. Senior officers, directors and designated compliance leads must ensure oversight is active and documented. Failure to appoint responsible personnel, as seen in one Vancouver case, results in systemic compliance breakdown. For organisations working with real-estate brokerages—such as lenders, escrow services, title insurers—these findings underscore the necessity of ensuring that partner entities uphold AML standards and that responsibilities for screening, monitoring and reporting are clearly delineated. Brokerages form part of the broader risk chain and must be evaluated accordingly.

For consulting and advisory firms assisting real-estate entities or institutions exposed to property-related transactions, several strategic actions emerge. These include conducting full gap analyses against statutory requirements; developing risk-based frameworks tailored to real-estate business models; establishing red-flag indicators specific to property transactions; ensuring sustained monitoring and documented decision-making; building real-estate-specific training programmes; arranging independent reviews at least every two years; strengthening collaboration with partner financial institutions; and maintaining meticulous records that capture account numbers, beneficial ownership, client identification, funding sources and monitoring outcomes.

The overarching theme remains that vigilance is essential. The five cases clearly demonstrate that Canada’s real-estate sector is now a primary focus of AML enforcement, with property transactions increasingly used to layer and integrate illicit funds. Regulators expect compliance programmes to be rigorous, customised and demonstrably functioning. Entities that fail to meet these standards face escalating penalties, reputational harm and potential legal disputes. For AML/CFT professionals supporting this sector, the mandate is unequivocal: treat real estate as a high-risk business line, implement strong controls and maintain constant vigilance.

By fLEXI tEAM