The short answer
Canadian mortgage lenders, brokers and administrators have been FINTRAC reporting entities since October 2024, and since 26 March 2026 the penalties for getting it wrong are up to 40 times higher. In the US, the picture is more mixed: the FinCEN residential real estate reporting rule is vacated pending appeal, and the Corporate Transparency Act now reaches only foreign companies. OFAC sanctions screening applies to everyone, all the time.
Canada: the PCMLTFA now covers the mortgage sector
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17 (PCMLTFA), and its regulations were extended to mortgage lenders, mortgage brokers and mortgage administrators on 11 October 2024. Those businesses must:
- Run a compliance program: appoint a compliance officer, adopt written policies, complete a documented risk assessment, deliver training and review effectiveness at least every two years.
- Identify clients using prescribed methods and confirm beneficial ownership (individuals holding 25% or more) of entity clients.
- Determine politically exposed persons and heads of international organizations, and apply enhanced measures to high-risk clients.
- Report suspicious transactions, large cash transactions of $10,000 or more, large virtual currency transactions and terrorist property.
- Keep records for at least five years.
What changed in March 2026
Two statutes received Royal Assent on 26 March 2026 (DLA Piper).
Bill C-12, the Strengthening Canada's Immigration System and Borders Act, raised maximum administrative monetary penalties from $1,000, $100,000 and $500,000 to $40,000, $4 million and $20 million for minor, serious and very serious violations (McMillan). It also introduced mandatory compliance agreements and compliance orders, and a new very serious violation for failing to maintain a compliance program that is "reasonably designed, risk-based and effective" (Blakes). Universal FINTRAC enrollment for reporting entities is coming; FINTRAC says details will follow.
Bill C-15, the Budget 2025 Implementation Act, No. 1, clarified how the client identification rules apply to mortgage administrators, brokers and lenders, with that change deemed in force from 1 October 2025.
United States: four regimes to know
1. FinCEN AML program and SAR rules for non-bank mortgage lenders. Since 2012, FinCEN's rules at 31 C.F.R. Part 1029 require non-bank residential mortgage lenders and originators to maintain an AML program and file suspicious activity reports. Private lenders making loans secured by one-to-four family residential property should confirm whether they fall within the definitions.
2. The Residential Real Estate Rule: vacated, on appeal. FinCEN's rule requiring reports on non-financed residential transfers to entities and trusts took effect 1 March 2026. On 19 March 2026, the Eastern District of Texas vacated it in Flowers Title Companies, LLC v. Bessent, holding FinCEN exceeded its authority under the Bank Secrecy Act. FinCEN appealed to the Fifth Circuit on 11 May 2026 (Davis Wright Tremaine). FinCEN confirms no reports are currently required while the order stands. Other district courts upheld the rule, so it could return. See Blog 2.
3. The Corporate Transparency Act: foreign companies only. FinCEN's final rule, effective 14 August 2026, permanently exempts US-formed entities and US persons from beneficial ownership reporting (FinCEN). Foreign entities registered to do business in a US state remain reporting companies and must report their foreign beneficial owners (Treasury). A Canadian corporation that qualifies to do business in Florida or Texas is squarely in scope. See Blog 3.
4. OFAC sanctions. The Office of Foreign Assets Control administers US sanctions on a strict-liability basis. Screen borrowers, guarantors, beneficial owners and payees against the Specially Designated Nationals list before funding and at each payment. Canada's equivalent obligations arise under the Special Economic Measures Act and related sanctions laws.
Building one KYC file that works on both sides
The Canadian and US regimes overlap enough that one well-designed file can satisfy both. Both use a 25% ownership threshold as the core beneficial ownership test, and both expect five-year record retention.
| KYC element | Canada (PCMLTFA) | United States |
|---|---|---|
| Identity verification | Prescribed methods (government photo ID, credit file, dual-process) | Customer identification under the lender's AML program, where applicable |
| Beneficial ownership | 25% or more; confirm and record reasonable measures | 25% or more under CTA definitions for foreign reporting companies |
| PEP screening | Required determination | Risk-based; enhanced due diligence expected |
| Sanctions | SEMA and Criminal Code lists | OFAC SDN list (strict liability) |
| Suspicious activity | STR to FINTRAC | SAR to FinCEN, where Part 1029 applies |
| Record retention | Five years | Five years |
A 30-day compliance tune-up
- Refresh your written risk assessment for cross-border clients and wires
- Map every PCMLTFA obligation to a named owner
- Book an effectiveness review if yours is over two years old
- Add OFAC and Canadian sanctions screening to funding and payment steps
- Confirm CTA status of any Canadian entity qualified in a US state
- Diarize the Fifth Circuit appeal in Flowers Title
Frequently asked questions
Frequently asked questions
Are private mortgage lenders in Canada subject to FINTRAC?
Yes. Mortgage lenders, brokers and administrators became PCMLTFA reporting entities on 11 October 2024.
How large are FINTRAC penalties now?
Since 26 March 2026, maximum administrative penalties are $40,000, $4 million and $20 million per violation depending on severity.
Is the FinCEN residential real estate rule in effect?
Not currently. A federal court vacated it on 19 March 2026, and FinCEN has appealed to the Fifth Circuit.
Does the Corporate Transparency Act apply to Canadian companies?
Yes, if the Canadian company is registered to do business in a US state. US-formed entities are now exempt.
This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com