Effective October 1, 2025, title insurers in Canada will be designated as reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). This regulatory change, published in the Canada Gazette in 2024, aligns title insurers with financial institutions in terms of compliance obligations. These include establishing a compliance program, verifying client identity, maintaining records and reporting to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), especially in cases of suspicious transactions or terrorist property1. The goal is to enhance oversight of real estate transactions, which are widely recognized as vulnerable to money laundering activities.
Although lenders and lawyers are not directly subject to FINTRAC in this context, the changes will have practical implications. Because title insurers rarely interact directly with borrowers or purchasers, they are considering delegating certain obligations—such as identity verification and the collection of transactional information—to third parties, including lawyers, through agency agreements. For lenders, this could mean additional steps prior to closing, potentially affecting funding timelines.
In Québec, the situation raises unique challenges. Professional secrecy is protected both constitutionally (Charter of Human Rights and Freedoms) and ethically (Code of professional conduct of lawyers). Any transmission of client information to a title insurer that could be disclosed to FINTRAC must therefore be supported by explicit, limited written consent2. Moreover, Québec lawyers are already subject to independent rules on client identification and verification (Règlement sur la comptabilité et les normes d'exercice professionnel des avocats). These obligations do not always align with the PCMLTFA requirements, creating a risk of dual compliance and additional complexity in interprovincial transactions.
This development also reflects an international trend. In the United States, title insurance companies must already report certain “all-cash” real estate transactions to the Financial Crimes Enforcement Network (FinCEN). Moreover, a new nationwide Residential Real Estate Rule will come into effect on December 1, 2025, requiring reporting for non-financed residential transfers3. Canada is taking a broader approach by designating title insurers as permanent reporting entities—a shift that could reshape the financing practices and due diligence standards.
For lenders, preparation is key. It is advisable to anticipate additional time for information collection, clarify responsibilities in mandates with lawyers and ensure that any agency agreement complies with applicable professional rules. Otherwise, lenders may face indirect liability or delayed closings.
Three key takeaways for lenders
- Anticipate delays: allocate extra time for the collection and validation of information required by title insurers.
- Clarify mandates: ensure that your mandates with lawyers specify roles and responsibilities to prevent confusion or indirect liability.
- Align practices: ensure you process comply with both Québec's legal framework and FINTRAC's new expectations.
Our Banking and Finance team is closely monitoring these developments and can help you structure transactions to avoid delays and compliance risks. Contact us to develop tailored strategies that support your financing goals.
Footnotes
1. Canada, Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), (2024) 158 Can Gaz I, 27, online: https://gazette.gc.ca/rp-pr/p1/2024/2024-07-06/html/reg4-eng.html; Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Title Insurers: Requirements in effect on October 1, 2025, online: https://fintrac-canafe.canada.ca/re-ed/title-titre-eng.↩
2. Québec, Règlement sur la comptabilité et les normes d'exercice professionnel des avocats, CQLR c B-1, r 5, online: https://www.legisquebec.gouv.qc.ca/en/tdm/cr/B-1,%20r.%205.↩
3. Financial Crimes Enforcement Network (FinCEN). Residential Real Estate Rule, online: https://www.fincen.gov/rre.↩
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