With the global escalation of financial crime, the publication of Canada’s 2025 Assessment of Money Laundering and Terrorist Financing Risks offers a timely benchmark for regulators and firms worldwide. Published by the Canadian Department of Finance, the report evaluates inherent threats, vulnerabilities and mitigation strategies within the country’s Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) regime.
For UK financial market participants, it provides valuable parallels, highlighting shared challenges in combating transnational threats and opportunities for cross-jurisdictional collaboration. As the UK refines its own AML framework under the Economic Crime and Corporate Transparency Act 2023 (ECCTA), including the new “Failure to Prevent Fraud” Offence which came into effect on 1 September 2025, Canada’s insights could help inform enhanced risk-based approaches.
Canada’s Risk Assessment Framework
The report outlines Canada’s AML/CTF ecosystem, involving 13 federal agencies, provincial partners and over 38,000 reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. It builds on prior assessments from 2015 and 2023, incorporating a “residual risk lens” to evaluate mitigation measures alongside inherent risks.
This methodology aligns with Financial Action Task Force (FATF) standards and supports evidence-based policymaking. It also echoes the Financial Conduct Authority’s (FCA) focus on similar methodologies for firms under its supervision. For instance, UK-regulated firms are expected to conduct a Business-Wide Risk Assessment (BWRA) that evaluates both inherent and residual risk, in line with the Money Laundering Regulations 2017 (MLRs).
Key Findings and Relevance to UK Firms
The report reveals a dynamic threat landscape. Fraud, Trade-Based Money Laundering (TBML) and tax crimes dominate the financial crime sphere, often involving sophisticated networks spanning national borders. Canada estimates that between $45 billion and $113 billion is laundered annually. The increasing prominence of ransomware and extortion in Canada mirrors trends in the UK, where cyber-enabled fraud surged post-COVID, prompting greater FCA scrutiny on enhanced due diligence and operational resilience.
Terrorist financing risks are characterised as low in volume but high in consequence. Threats stem from ideologically motivated lone actors domestically and foreign-based groups with diversified funding through crowdfunding, crypto and Informal Value Transfer Systems (IVTS). The report also highlights emerging risks from AI-driven disinformation, which could amplify terrorist and proliferation financing.
FCA-regulated firms operating internationally should note Canada’s Ministerial Directives targeting high-risk jurisdictions such as Russia, Iran and North Korea, much akin to UK sanctions regimes. These directives closely resemble the UK’s own sanctions regime and HM Treasury’s lists of high-risk third countries under Regulation 33(3) of the MLRs.
Sectoral Vulnerabilities
Canada’s report identifies key vulnerable sectors enabling opaque, high-volume transactions:
- Domestic systemically important banks,
- Private corporations,
- Express trusts,
- Crypto assets, and
- Money Services Businesses (MSBs).
These enable rapid, opaque transactions, often with reduced transparency. Non-profit organisations pose medium terrorist financing risks, mainly for those operating in conflict zones, though the vast majority are considered low risk.
Parallels with the UK Regulatory Landscape
The parallels between Canada and the UK are significant. Both nations boast mature financial systems with high digital adoption. For instance, 82% of Canadians bank online, comparable to UK figures. Crypto vulnerabilities align with FCA warnings on unregistered firms, while TBML exploits in Canada’s trade-heavy economy reflect similar UK exposure.
The report’s focus on AI misuse for fraud and deepfakes mirrors FCA consultations on emerging tech risks. Moreover, Canada’s pan-Canadian beneficial ownership initiative, including public registries, closely follows UK enhancements to Companies House reforms earlier this year under ECCTA, with both countries aiming to reduce the abuse of shell companies.
UK firms with Canadian exposure, including banks and MSBs, should consider the Canadian findings within their own enterprise-wide risk assessments. More broadly, the report offers a relevant perspective on the global evolution of financial crime risks.
It is worth noting that the FCA expects UK firms to consider the UK’s own National Risk Assessment (NRA), with the most recent version published in 2020. Canada’s updated 2025 assessment could offer useful reference points in understanding how financial crime threats have evolved since then.
Conclusion: A Call for Proactive Compliance
Canada’s 2025 assessment reinforces the importance of adopting dynamic, risk-based compliance frameworks amid shifting geopolitical and technological landscapes. For UK firms, applying a residual risk lens could further align their approach with FCA expectations, ensuring proportionate and effective controls without hindering innovation.
How Complyport Can Help
At Complyport, we specialise in equipping UK financial institutions, from FCA-regulated entities to HMRC registered firms with robust AML solutions tailored to today’s national and global evolving threats.
Our services include:
- AML/KYC Policy Development: We assist firms in developing and updating AML policies and risk assessments to align with regulatory requirements.
- Regulatory Compliance Audits: Our team conducts comprehensive reviews of your firm’s AML practices to identify potential vulnerabilities and ensure compliance with the latest standards.
- Staff Training on Compliance Practices: Our training incorporates FCA expectations, MLR 2017 requirements, and recent global regulatory developments to minimise the risk of inadvertent breaches or perceived discriminatory actions.
Contact Us
For more information on strengthening your AML frameworks or navigating the implications of the new risk assessment, contact our team today to schedule a consultation with one of our Subject Matter Experts.
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