Understanding Canada’s 2025 National Risk Assessment of Money Laundering and Terrorist Financing

The Government of Canada recently released its 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, also referred to as the "National Risk Assessment” (the “2025 NRA”). The 2025 NRA is a risk assessment that assigns ratings to inherent money laundering (“ML”) and terrorist financing (“TF”) threats and vulnerabilities in Canada, providing crucial insights into the country’s most significant risk exposures.

Canada’s Anti-Money Laundering and Anti-Terrorist Financing (“AML/ATF”) Regime (the “Regime”) is intended to promote the integrity of the financial system, the safety and security of Canadians, and supports combating transnational organized crime. Working with provincial and municipal counterparts, as well as reporting entities (“REs”)—Canadian businesses regulated under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)—the goal of the Regime is to prevent, detect, and disrupt financial crime.

This Finance Alert examines how the 2025 NRA updates the findings of earlier reports published in 2015 and 2023 and evaluates the impact of current regulatory, supervisory, and enforcement measures on Canada’s evolving risk landscape.

The 2025 National Risk Assessment

This new assessment highlights the following key findings:

• Organized crime groups (“OCGs”) and third-party enablers are the main ML threat actors;
• Illegal drug trafficking remains the highest ML threat in Canada, followed by fraud, commercial trade fraud, trade-based ML, and tax crimes;
• Other substantial ML threats include illegal gambling, human smuggling, robbery, theft, cross-border smuggling, corruption, ransomware, and other types of extortion;
• Canada’s TF landscape overall remains “low volume and low value”;
• Foreign-based threat actors with TF links to Canada are religiously and/or politically motivated and use various funding sources, including crowdfunding, cryptocurrencies, informal value transfer systems (IVTS), state sponsorship, abuse of non-profit organizations (“NPOs”), and criminal activity; and
• Businesses that engage with politically exposed persons, jurisdictions with weak AML/ATF frameworks, or where listed terrorist entities operate may be exposed to higher ML and TF risks requiring enhanced due diligence.

National Risk Assessments across 2015, 2023, and 2025

NRAs have evolved over the past decade from categorical to dynamic assessments of inherent risks and mitigation measures, better aligning with global expectations and domestic realities.

The NRA published in 2015 (the “2015 NRA”) provided a baseline assessment of inherent ML/TF risks across 27 economic sectors, aligning with Financial Action Task Force (“FATF”) global AML/ATF standards calling on all members to undergo an assessment of ML and TF risks. The greatest vulnerabilities were found in domestic banks, private corporations, MSBs, and express trusts—largely due to anonymity, structural complexity, and links to high-risk jurisdictions. The 2015 NRA focused on 21 predicate offences, including corruption/bribery, counterfeiting/piracy, fraud, and illicit drugs. Criminal offences, followed by the laundering of their proceeds, are known as “predicate offences”.

The scope of the NRA published in 2023 (the “2023 NRA”) expanded to 33 economic sectors, confirming that domestic banks, private corporations, MSBs, and express trusts continued to present significant vulnerabilities. This assessment also highlighted emerging risks in areas such as real estate and virtual assets, and newly flagged sectors such as armoured cars, unregulated mortgage lenders, freight forwarders, and customs brokers. The 2023 NRA focused on 23 predicate crimes, with illicit drug trafficking, fraud, illegal gambling, corruption, and third-party laundering posing the highest ML threats. Compared to the 2015 NRA, threat levels for tax evasion, wildlife trafficking, and online fraud schemes increased, while tobacco smuggling declined. New typologies of threats and vulnerabilities were highlighted, including fentanyl trafficking, crypto-based laundering, real estate misuse, and capital markets fraud.

The 2025 NRA places more emphasis on evidence-based decision-making, resource allocation, and balancing competing priorities like financial integrity, national security, privacy, and regulatory burden. Its scope expanded to emerging risks such as AI-enabled fraud, foreign interference, and the nexus between organized crime and terrorism. The regulated population grew to 38,000+ reporting entities, highlighting the system's growing complexity.

Since the previous report, the 2025 NRA demonstrates that sectoral vulnerabilities have remained relatively stable, with banks, corporations, MSBs, express trusts, and crypto-related activities continuing to present the most significant inherent risks. New dimensions of concern include political exposure and sustained ties to high-risk jurisdictions.

The 2025 NRA identifies illicit drug trafficking as the highest ML threat. The annual illicit proceeds from fraud, trade fraud, trade-based ML, and tax crimes are now billions. Additional threats include illegal gambling, human trafficking, auto theft, ransomware, extortion, and corruption. The 2025 report highlights the growing nexus between organized crime and terrorism, with a complex risk landscape shaped by sophisticated enablers, AI-driven fraud schemes, ransomware, and overlapping activities of organized crime and extremist networks.

As touched on earlier, the 2025 NRA also emphasizes the importance of strengthening mitigation, with nearly $470 million invested in intelligence, data, and partnerships since 2018. This assessment reaffirms the importance of regulatory balance and the need to mitigate risks without burdening legitimate industry participants.

Final thoughts

By relying on the NRA to guide risk-based approaches and implement proportionate mitigation measures, together with two recently issued regulations by the FATF (Proceeds of Crime (Money Laundering) and Terrorist Financing Reporting of Goods Regulations, SOR/2025-67; and Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations, SOR/2025-68), REs will be better positioned to address emerging threats and vulnerabilities going forward.

If you feel your business may be affected by these developments, please contact a member of our Financial Services or Compliance teams for assistance.