Canada is expected to avoid being placed on the Financial Action Task Force’s (FATF) “grey list” following an ongoing evaluation of its financial-crime controls, according to sources familiar with the matter. The FATF, a global organization of 40 member countries that sets standards to combat money laundering and terrorist financing, is conducting a detailed review alongside the Asia/Pacific Group on Money Laundering, a regional body with 42 members to which Canada also belongs.

The assessment, which is not yet complete, focuses on Canada’s framework to detect, deter, and disrupt illicit financial flows. While preliminary ratings from the evaluation team indicate Canada may not meet the thresholds for grey-listing—a designation that signals weaknesses in anti-money laundering and anti-terrorist financing (AML/CTF) efforts—official results will only be published in a final report scheduled for release in the fall.

Countries placed on the FATF’s grey list face enhanced monitoring and increased scrutiny from other jurisdictions, which can negatively affect foreign investment, trade relations, and sovereign credit ratings. Currently, over 20 countries—including Kuwait, Monaco, the British Virgin Islands, and Venezuela—are on the grey list. A smaller number of nations with more severe deficiencies, such as Iran, North Korea, and Myanmar, are blacklisted.

Concerns about Canada’s evaluation have been linked to regulatory shortcomings highlighted by a high-profile criminal case involving Toronto-Dominion Bank (TD). In 2024, TD pleaded guilty in the United States to conspiracy related to money laundering and failing to comply with anti-money laundering regulations. The bank paid over US$3 billion in fines, and the Federal Reserve Board required portions of TD’s compliance program to be relocated under U.S. regulator oversight, a move seen by some as signaling weaknesses in Canadian regulatory supervision.

Another area under scrutiny is Canada’s enforcement effectiveness. A 2023 Department of Finance report showed a decline between 2010 and 2020 in enforcement results, including investigations, prosecutions, convictions, and asset forfeitures related to financial crimes.

The FATF’s evaluation process involves confidential drafts and iterative reviews. Canadian officials have been engaged in discussions with the evaluation team and are expected to push for upgrades to some provisional ratings before the final report is shared with all member delegations. While Canada’s final assessment could lead to enhanced follow-up—a more intensive monitoring phase introduced for countries needing to show more rapid progress—sources indicate the government is seeking to avoid this outcome and maintain the status of regular reviews, which is viewed as the more favorable scenario among industrialized nations.

Canada has previously undergone enhanced follow-up after its 2016 evaluation but returned to regular review status in 2021 after addressing identified deficiencies. Ahead of the forthcoming FATF plenary in Paris from June 17 to 19, and the subsequent meeting of the Asia/Pacific Group on Money Laundering in July, Canadian officials have highlighted recent government initiatives aimed at strengthening financial crime prevention. These include plans for a new Financial Crimes Agency, a proposed ban on cryptocurrency ATMs, and the development of a national anti-fraud strategy.

Both the FATF and Canada’s Department of Finance have emphasized that the ongoing review remains confidential and that no definitive conclusions should be drawn until the evaluation process is complete. The final report is expected to be released in September or October.