British Columbia’s Bill 29, the Mortgage Services Act, introduces sweeping reforms to mortgage lending oversight, effective October 2026. This legislation expands regulatory scope to include foreign and non-Canadian lenders, brokers, and administrators, mandating licensing and robust anti-money laundering (AML) compliance programs. The B.C. Financial Services Authority (BCFSA) will enforce these rules, addressing gaps in the prior regime that left unregulated lenders vulnerable to financial crime risks.
The act responds to heightened money laundering concerns in real estate, a sector flagged in Canada’s Financial Action Task Force (FATF) evaluations. It requires risk assessments for clients, products, jurisdictions, and transactions, alongside ongoing monitoring to detect suspicious activities. Non-compliance could trigger severe penalties, including fines and license revocation, pushing lenders to overhaul operations well before the deadline.
Key Provisions in Bill 29
Bill 29 broadens licensing categories to encompass mortgage lenders, previously exempt if not classified as banks or credit unions. Lenders must now implement full “know-your-customer” (KYC) protocols, even for unrepresented parties in transactions handled by brokers. This includes verifying client identities, understanding business activities, and ensuring transaction realism relative to borrower profiles.
Disclosure requirements persist from the old act, but expect enhanced borrower protections, such as clearer loan terms and risk warnings. BCFSA has released initial guidance for brokers, with lender-specific rules forthcoming, emphasizing adaptability for cross-border operations. Foreign institutions face unique hurdles, like navigating B.C.-specific licensing without prior precedents.
The act equips BCFSA with stronger investigative powers, including audits and sanctions, to curb predatory lending and illicit finance flows. Transition guides urge early compliance planning, as full enforcement ramps up post-October 2026.
Federal AML Regime Updates
Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), overseen by FINTRAC, has accelerated AML obligations, with major changes effective April 1, 2025. These target real estate professionals, including brokers and lenders, mandating enrollment, risk-based compliance programs, and suspicious transaction reporting. Penalties under the Strong Borders Act (Bill C-2) surged up to C$20 million, a 40-fold increase, reflecting FATF pressures.
New rules cover financing, leasing, and factoring entities, excluding low-risk consumer goods but including high-value property and vehicles over $100,000. Mortgage sectors must now perform KYC, record-keeping, and monitoring, aligning with broader efforts against transnational crime. October 2024 updates specifically hit mortgage brokers, expanding from prior scopes.
Synergies Between Bill 29 and National AML
Bill 29 complements FINTRAC’s expansions by provincializing federal AML standards, creating a unified front against real estate money laundering. While federal rules apply nationwide, B.C.’s act layers local licensing and disclosures, amplifying KYC for mortgage-specific risks like foreign buyer anonymity. This dual regime demands integrated compliance strategies, as non-Canadian lenders balance B.C. rules with PCMLTFA reporting.
Industry experts note the accelerated federal timeline—shifted from October 2025—pressures lenders amid B.C.’s buildup to 2026. BCFSA and FINTRAC coordinate enforcement gradually, offering adjustment periods but signaling zero tolerance long-term. Real estate’s high-risk profile, per government analyses, justifies these overlaps.
Compliance Challenges for Lenders
Lenders face a “heavy lift” in building risk assessments covering client profiles, loan products, delivery channels, and geographies. Foreign entities must secure B.C. licenses, adapt disclosures, and integrate FINTRAC reporting, potentially raising operational costs. Brokers acting for unrepresented parties add KYC layers, broadening exposure.
Penalties escalate risks: federal fines hit millions, while B.C. revocation halts provincial business. Smaller administrators struggle with program implementation, needing tech for transaction monitoring. Preparation involves gap analyses, training, and vendor audits by mid-2026.
Industry Impacts and Next Steps
Mortgage stakeholders anticipate stabilized lending but decry administrative burdens, potentially cooling B.C.’s hot real estate market. Foreign capital, key to development, may hesitate without clear rules. Positively, enhanced safeguards boost consumer trust and deter crime.
Recommendations include monitoring BCFSA rule releases, conducting mock audits, and consulting specialists. Enrollment with FINTRAC is immediate for applicable entities, with renewals mandatory. As Canada’s AML strategy evolves through 2026, unified compliance fortifies the sector against illicit threats