Money Laundering
Money laundering is disguising the origins of funds made through criminal activity or incorporating them into the regular financial system.
Jump to section
Plain-Language Summary
Money Laundering: Section 385 of the Criminal CodeA federal act codifying most criminal offences in Canada states you can be charged with money launderingConcealing the origins of money obtained illegally if you are involved in any way with disguising the origins of funds made through criminal activity or if you are part of the process to incorporate those funds into the regular financial system. This crime is most frequently carried out by members of criminal organizations or those committed white-collar crime, though the extent of it in Canada is difficult to track. The maximum sentence upon conviction is 10 years in prison.
Money Laundering in Canada
Money laundering is the process used commonly by criminal organizations (Organized crimeA organization whose members work together on criminal activities) or white-collar criminals (White-collar crimeA crime where the primary motive is financial in nature) to disguise the origin of money so that it appears legitimate. This can involve setting up a cash-based business, such as a restaurant, then mixing the legitimate money with the criminal proceeds so that tax authorities or police are unable to track the source of the funds. Another method is to buy a big-ticket item like a car, boat or home for cash. That asset can then be sold and converted into "clean" cash.
Section 462.31 of the Criminal Code makes it an offence for you to be involved in any way with the laundering of the proceeds of crime, such as using, transferring or transporting funds raised through criminal activity. This section of the Code was amended in 2019 to make it a crime to be "reckless as to whether, all or a part of that property or of those proceeds was obtained or derived" from criminal activity. That means if you should have known or suspected the funds were not legitimate but you played some role in a transaction, you could be charged with money laundering.
What Steps Authorities are Taking
Since money laundering is hidden, it is difficult to determine how widespread of an issue it is in Canada. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act makes it mandatory for individuals and financial institutions to report a variety of transactions to a central office. The reporting is designed to assist in the detection and prosecution of money. In 2019, the (Government of Canada invests $98.9M over five years to modernize the RCMP and strengthen its foundations to help fight money laundering and identify proceeds of crime) in Integrated Money Laundering Investigative Teams in British Columbia, Alberta, Ontario, and Quebec, to battle this issue.
What is Needed to Convict
To win a conviction the Crown has to prove beyond a reasonable doubtThe standard that must be exceeded to find someone guilty that you assisted in the process to launder money obtained through criminal activity. They have to show that you knew, or should have known, your actions were illegal. It is not necessary that you knew the exact origin of the funds, as wilful blindness is not a defence.
Since many money laundering schemes are international in scope, the Crown also has to prove the crime lies within the jurisdiction of the Canadian legal system. In 1985, the Supreme Court (Libman v. The Queen) ruled cases can be prosecuted here if “a significant portion of the activities constituting that offence took place in Canada.”
Money Laundering a Hybrid Offence
Canadian courts deal with offences in three ways. Summary convictionUsed for lesser offencess are for less serious crimes such as thefts under $5,000. Indictable offenceA more serious type of Canadian criminal offence.s deal with such charges as murder, sexual assault and aggravated assault. In between are what are called hybrid offenceAn offence the Crown can proceed with summarily or by indictment.s, which includes money laundering, which the Crown can deal as either a summary or indictable offence.
The Penalty for Money Laundering in Canada
If the charge is treated as an indictable offence, the maximum sentence is 10 years in prison, with lesser sentences given for summary convictions. An exemption is given to peace officers who commit this act “for the purposes of an investigation.”
How the Crown proves knowledge
For some money-laundering prosecutions, the Crown does not always have to prove that the accused knew the exact underlying offence that generated the proceeds. The Criminal Code also allows certain inferences from the circumstances. Those rules do not apply in the same way if the accused is also charged with the designated offence itself.
What is a 'designated offence'?
A designated offence generally means an offence that can generate proceeds of crime under the Criminal Code’s proceeds-of-crime rules.
What the Crown Must Prove
To get a conviction, the Crown must prove every part of the offence beyond a reasonable doubt.
Section
An act of dealing with property or proceeds
The accused used, transferred the possession of, sent, transported, transmitted, altered, disposed of, or otherwise dealt with, in any manner and by any means, some property, proceeds, or a benefit or advantage.
Intent to conceal or convert
The accused did so with intent to conceal or convert that property or those proceeds — the core purposive element distinguishing money laundering from mere possession or dealing.
Knowledge or belief the property is proceeds of crime
The accused knew or believed, or was reckless as to whether, all or part of the property or proceeds was obtained or derived directly or indirectly from a designated offence committed in Canada, or from an act or omission that would have been a designated offence if it had occurred in Canada. (The 2019 amendment (S.C. 2019, c. 25) broadened the mens rea from 'knowing' alone to also capture recklessness.)
No requirement to prove knowledge of the specific predicate offence
Under s.462.31(2.2), the Crown is not required to prove knowledge or belief that the property or proceeds were obtained or derived from a specific designated offence — general knowledge/belief that it derived from crime suffices.
Circumstantial inference of knowledge available to the trier of fact
Under s.462.31(2.3), the court may infer the knowledge, belief, or recklessness required from the circumstances of the transaction, including that it was conducted in a manner that is markedly unusual or inconsistent with lawful practices typical of that sector.
For the aggravated form only — criminal organization nexus
For the s.462.31(2.1) 14-year form, the Crown must additionally prove the laundering was done for the benefit of, at the direction of, or in association with a criminal organization (as defined at s.467.1).
Section 462.31
When the shortcuts do not apply (s. 462.31(2.4))
Subsections (2.2) and (2.3) do not apply in cases where the accused is also charged with the designated offence. For some money-laundering prosecutions, the Crown does not always have to prove that the accused knew the exact underlying offence that generated the proceeds. The Criminal Code also allows certain inferences from the circumstances. Those rules do not apply in the same way if the accused is also charged with the designated offence itself.
A proof rule (a presumption) is a rule about evidence. It does not mean the person is automatically guilty. It means the court may treat one fact as evidence of another fact unless there is evidence pointing the other way.
Possible Penalties
These are maximum sentences. Actual sentences depend on the facts, criminal history, and any mitigating or aggravating circumstances.
Laundering proceeds of crime — s. 462.31(1)
HybridNo mandatory minimum applies. On summary conviction, the general s. 787(1) default applies: a fine of up to $5,000, imprisonment for up to two years less a day, or both.
Laundering proceeds of crime for the benefit of, at the direction of, or in association with a criminal organization — s. 462.31(2.1)
IndictableThe aggravated form: the Crown must additionally prove the criminal-organization connection. No mandatory minimum applies.
What these words mean
- Indictable
- The more serious way to prosecute an offence. It can carry higher maximum penalties.
- Summary conviction
- The less serious, usually faster way to prosecute an offence, with lower maximum penalties.
- Hybrid
- An offence the Crown can prosecute either way — by indictment or by summary conviction.
- Summary only
- Summary-only offences are prosecuted by summary conviction. The Criminal Code sets the maximum penalty in the specific offence section.
- Crown election
- The Crown prosecutor’s choice of which way to proceed on a hybrid offence.
Possible Defences and Legal Issues
Money Laundering — s.462.31
Section 462.31 has a narrow exception for police investigations. A peace officer, or someone acting under a peace officer's direction, is not guilty if the conduct was done for an investigation or in the execution of police duties. This is not a general defence for civilians. For anyone else, the Crown still has to prove the required knowledge or recklessness and the intent to conceal or convert the proceeds.
Common Legal Terms
Terms marked with a dotted underline in the article above are defined here and available in the full site glossary.
- Hybrid offence Glossary entry →
A hybrid offence is an offence where the Crown can choose whether to proceed by summary conviction or by indictment. The choice can affect the procedure, possible penalties, and sometimes the court where the case is heard.
- Indictable offence Glossary entry →
An indictable offence is generally a more serious type of Canadian criminal offence. Some indictable matters have higher maximum penalties and may involve different court procedures, including election about the mode of trial in some cases.
- Organized crime Glossary entry →
The Criminal Code defines organized crime as a group of three or more people whose purpose is the commission of one or more serious offences that would “likely result in the direct or indirect receipt of a material benefit, including a financial benefit, by the group.” That is often through crimes such as gambling, prostitution or drug trafficking.
- Reasonable doubt Glossary entry →
The Supreme Court of Canada has said that reasonable doubt “falls much closer to absolute certainty than to proof on a balance of probabilities” and “that something less than absolute certainty is required, and that something more than probable guilt is required."
- Summary conviction Glossary entry →
Summary convictions are used for lesser offences with penalties, fines and short jail time. They reflect the majority of offences as defined in the Code.
- White-collar crime Glossary entry →
A non-violent crime where the primary motive is typically financial in nature, usually carried out by those in business or management positions
Legal sources
The official statute section(s) this page is based on. Always confirm against the official source before relying on it.
-
Criminal Code s. 462.31 Laundering proceeds of crime — offence, punishment, proof rulesSource current to: 2026-05-26View official source ↗
-
Criminal Code s. 462.3 Definitions — 'designated offence' and 'proceeds of crime'Source current to: 2026-05-26View official source ↗
-
Criminal Code s. 787 General summary-conviction penalty (default for s. 462.31(2)(b))Source current to: 2026-05-26View official source ↗
Government References
Find a Criminal Defence Lawyer Near You
If you or someone you know is facing criminal charges, a criminal defence lawyer can review the situation and explain the options.
Search the Lawyer DirectoryCriminal Code Help does not endorse or recommend specific lawyers.
Report an inaccuracy or concern about this page
Report an inaccuracy or concern about this page
Report: Money Laundering
Use this form to report a possible error, outdated information, unclear wording, broken link, or other concern about this page.
General legal information only. Not legal advice. We do our best to keep this page accurate and up to date, but criminal law can change and every case depends on its facts. Check the review date and consult the Criminal Code or a criminal defence lawyer before relying on this information.
About this page
Criminal Code Help explains selected Criminal Code offences and related legal concepts in plain language. The goal is to help readers understand the general meaning of the law without having to read the full statutory text.
This page is a simplified summary. It does not include every exception, definition, court interpretation, evidentiary issue, Charter issue, sentencing factor, or procedural rule that may apply in a real case.
Legal information, not legal advice
This page is general legal information only. It is not legal advice and should not be relied on as advice about any specific charge, investigation, court file, or personal situation.
Possible defences and legal issues depend on the facts, the evidence, the exact charge, current Canadian law, and the province or territory where the case is being handled. If you are facing a criminal charge or researching a real legal problem, speak with a criminal defence lawyer in your province or territory.