LSO advises real estate lawyers of new AML rules for title insurers

Law360 Canada (September 12, 2025, 2:18 PM EDT) -- Ontario’s legal regulator is asking real estate lawyers to be aware of new anti-money laundering requirements for title insurers starting at the beginning of next month.

As of Oct. 1, title insurers across Canada will become reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and regulated by the Financial Transactions and Reports Analysis Centre of Canada, also known as FINTRAC. Title insurance is a policy protecting property owners and lenders from financial loss due to title defects that weren’t discovered during a standard title search, such as fraudulent transfers and unpaid liens.

This change introduces new anti-money laundering (AML) compliance obligations for title insurers, such as verifying the identity of the purchaser of real property to whom the title insurer will provide a title insurance policy, recording information like the name and address of the real estate purchaser, and reporting certain suspicious transactions and sanctioned property to FINTRAC.

In a recent notice, the Law Society of Ontario (LSO) is pointing out that these requirements will directly affect real estate lawyers, particularly in how they obtain and disclose client information, verify client identities and manage risks in real estate transactions. Title insurers can ask an agent — such as a real estate lawyer — to fulfill their verification and record-keeping obligations to FINTRAC, provided a written agreement is entered into beforehand.

To facilitate the issuance of title insurance, lawyers may be asked by clients or title insurers to assist in verifying the identity of the insured using the prescribed verification procedures under the PCMLTFA. These procedures are similar to lawyers’ client identification and verification obligations under law society bylaws. Lawyers must obtain the client’s informed consent before sharing any confidential or privileged information with a title insurer. This means the lawyer must provide the client with all information relevant to their decision to disclose in sufficient time for them to make a genuine and independent decision. They must also take reasonable steps to ensure the client understands the matters disclosed.

Title insurance has become an established part of real estate practice, said Ray Mikkola of Mississauga, Ont.’s Pallett Valo LLP.

“And I don’t think that is going to be displaced because of this,” he said. “So, what we need to do as real estate lawyers is ensure that our client understands that we’ll be disclosing this information and that the title insurer has these obligations that we don’t control — lawyers should be preparing to give clients that advice and to get the client’s consent.”

But Mikkola emphasized that the changes do not mean lawyers will be directly subject to FINTRAC oversight.

“There’s obviously this conflict between the duty of a lawyer on confidentiality and the ability of the government to get information that will help it for a good societal reason,” he said. “But this doesn’t create that kind of conflict.”

The law society said its practice management helpline is available to assist licensees with ethical questions about these changes and can be contacted at 416-947-3315 or toll-free at 1-800-668-7380, ext. 3315.

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