Inside Canada’s Fraud Problem

Fraud rates are soaring in Canada – are we ready for the consequences? According to TransUnion, digital fraud rates jumped by 39% in 2023, the 3rd largest jump among 19 countries analysed. More than 70% of Canadians said they would not return to a website if they had fraud concerns, and 42% have abandoned their shopping carts for the same reason. Fraud is the most common crime in Canada, and more than 50 common scams are currently targeting Canadians. 

From crypto scans to fake romances and ransomware, here’s a look at the how, and why, of Canada’s fraud problem:

Canada’s High Risk of Fraud

Canadians, by and large, prefer to be cashless: research from Moneris suggests that cash will make up less than 10% of all purchases in Canada by 2030. This quick shift to a cashless society comes with plenty of digital purchases – but is our regulatory system equipped to handle them? Canada has strong digital participation, but not the same consumer protection as places like Japan, Europe, or the U.K. The lower friction in Canada (say, a verification step like 2fa or fingerprint authentication) is great for speedy checkout – but it’s not so great for fraud. 

Canada operates under a fragmented KYC landscape, where regulatory requirements straddle banks, provincial regulators, and payment processors. The core AML/KYC policy in Canada sits with FINTRAC under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act  but reporting entities include banks, fintechs, mutual funds, and other payment service processors. These bodies are provincially regulated under securities regulators, and might have two levels of compliance reporting. KYC/AML policies that apply to a traditional bank might differ from those that apply to a fintech or crypto-exchange; this creates less certainty than somewhere like Europe, where all identity and authentication standards are held under PSD2. 

For industry parties, KYC teams, and the consumer in general, this creates more risk for synthetic identities, recycled credentials, or fake claims. 

Why KYC Teams and Brokers Should Pay Attention

Canada’s fraud is on the rise, and this trajectory isn’t likely to change – at least not without structural updates in authentication, reporting, and verification requirements. Fraud in Canada is growing, and failure to protect your customers from it can seriously harm your reputation. Fraud increases operational risk for brokers and raises risk exposure for KYC teams, as synthetic identities infiltrate everything from auto policies to commercial insurance.

‍Emerging types of fraud exploit gaps in identity verification, payment processing, and regulation. Breaches reduce customer trust and their loyalty to your company – and more and more customers are onboarding with mixed digital footprints, compromised credentials, or fake IDs. Cross-border fraud rings are increasingly using Canada as the entry point, and multiple channels (banking insurance, fintech) might see the same fake identity. 

For brokers, banks, and fintechs, compliance is more than just regulatory requirement – and it’s up to layered, multi-modal forms of KYC (and good screening) to act as a safeguard for your business, your reputation, and your team.