Did Canada Ignore Immigration Fraud on Purpose?

Canada’s international student program is under fire and the numbers are hard to ignore.

In this episode, Sabrina Maddeaux and Mike Moffatt break down a shocking Auditor General report that uncovered major enforcement failures inside Canada’s immigration system. With over 153,000 potentially non-compliant students flagged and little follow-up from authorities, this isn’t just a bureaucratic slip-up. It raises serious questions about oversight, accountability, and trust.

Is this really about growing too fast, or did the government fail to enforce its own rules?

We dive into:

• The difference between a capacity problem vs. an enforcement problem
• Why thousands of fraud cases were never investigated
• How approval rates hit 98% in high-risk streams
• The impact on housing affordability and job markets
• What this means for public trust in Canada’s institutions
• And whether cutting immigration targets actually solves anything

This conversation unpacks how policy decisions ripple across the economy, and why fixing the system may require more than just lowering the numbers.

Chapters:

00:00 – Intro: Auditor General Report: The Big Findings

00:45 – Enforcement Failure

01:47 – “Deliberate and Scandalous” Fraud Handling

03:42 – What the Program Was Supposed to Do

04:34 – What It Became: Wage Suppression & Exploitation

05:24 – Housing Crisis Impact

07:45 – Only 40% Confirmed They Leave Canada

09:32 – The Case for Retroactive Enforcement

11:02 – Why Cutting Immigration Isn’t Enough

RESEARCH LINKS:

Auditor General Report on International Student Program (March 2025): https://www.canada.ca/en/auditor-general/our-work/audit-reports/auditor-general-report-2026-international-student-program-reforms.html

Hosted by Mike Moffatt & Cara Stern & Sabrina Maddeaux

Produced by Meredith Martin

Funded by the Neptis Foundation https://neptis.org/

Transcript

SPEAKER_02 0:00

The AG report noted the government has zero visibility into whether students actually leave when their permits expire, which is absurd.

SPEAKER_00 0:07

The program devolved into this kind of temporary, shadow, temporary foreign worker program, which suppressed wages in sectors such as retail and hospitality, which are disproportionately staffed by young people.

SPEAKER_01 0:19

Class ENOMEX, hosted by Sabrina Mado and Mike Moffat.

SPEAKER_02 0:25

So I've been writing about immigration fraud for a while now, but a recent auditor general's report into Canada's international student program really put numbers to something I've been tracking for a while. The federal government has tried to spin this as opening the floodgates too fast, but Mike, when you look at the actual findings here, is this really just a case of moving too quickly?

SPEAKER_00 0:44

Well, I think the key distinction here is between a capacity problem and an enforcement problem. And the Auditor General's report makes it very clear that it's heavily an enforcement problem. And the numbers here are staggering. Immigration, Refugees, and Citizenship Canada, the federal agency responsible for enforcing the rules, identified 153,000 potentially noncompliant students, an absolutely staggering number. However, they only funded around 2,000 investigations a year, which is a drop in the bucket. In over 40% of those investigations, when they contacted the student, they didn't get a response. Now, normally if a government agency like the Canada Revenue Agency or a police department contact you and you fail to respond, they're going to escalate the matter. But IRCC chose not to do that. Instead, they simply accepted the non-response and dropped the matter. Now, there are a number of scandals here, but the AG report identified a big one that the department chose not to act, even when they had cases in front of it. Now, Sabrina, you wrote in a column for the National Post that this isn't just sloppy administration. You call it, and I quote, deliberate and scandalous. That's a pretty strong language. So what makes you characterize it in that way rather than just saying, oh, it's, you know, typical bureaucratic failure?

SPEAKER_02 2:06

Yeah, this wasn't just a few mistakes that slipped through the cracks. The AG found that IRCC's own risk assessment units had flagged 800 cases of fraudulent documents or misrepresented information. And the department didn't pursue enforcement action in a single one of them. That's a choice. They also found 92% of fraudulent applicants were later approved or awaiting decisions on other immigration applications. So this wasn't an accidental gap. It's a pipeline that they chose to allow to continue and simply ignore.

SPEAKER_00 2:36

And that 92% figure is absolutely massive. And that kind of raises a question: did the auditor general indicate that there are any patterns when it comes to these uh potentially fraudulent applications?

SPEAKER_02 2:47

Yeah, there are a couple big ones. So the department had identified India specifically as a high-risk source of targeted fraud in the student direct stream, which is also the stream where they found the most fraud, yet they maintained a quote unquote light touch policy here. So that resulted in approval rates going from 61% to 98% in two years, which we should not be having 98% approval on any immigration stream that shows fraud is getting through and should have raised alarm bells. Now, the government has since canceled the SDS stream after the fact, but that still doesn't account for the people who got through during that time period or answer for who authorized a near 100% approval rate on a flagged stream. Now, Mike, you've studied how immigration policy intersects with housing and labor markets. What are the downstream economic impacts when you rapidly increase the number of international students in a system without a lot of oversight, to put it mildly?

SPEAKER_00 3:42

Now, I would say the core idea behind integrating international student programs and the immigration system is actually quite sound because traditionally new immigrants of Canada come in their late 20s and early 30s after receiving their education elsewhere. So it can often be challenging for them to integrate into the Canadian labor market as their credentials are not often well recognized by employers. And it could be challenging for them to integrate into Canadian culture and Canadian business culture. So instead of bringing people at that age, we could have young, talented people come over at say 18 or 19, get their degree or diploma here, work for a couple of years after graduation, then gain permanent residency. And if we do this correctly, it eliminates the credential problem entirely and gives newcomers years of experience with Canadian culture before they start their careers.

SPEAKER_02 4:32

Right. But that's not what ended up happening.

SPEAKER_00 4:34

Well, to be fair, we did see at some schools, you know, live up to the spirit of this. And we should be clear about that. There were some institutions that grew slowly and added international students to very valuable programs. But for others, instead, what we saw is the massive scaling up of programs, many of which had little or no educational value. The incoming students were often misled about what they were coming into. And the program devolved into this kind of temporary shadow, temporary foreign worker program, which suppressed wages in sectors such as retail and hospitality, which are disproportionately staffed by young people.

SPEAKER_02 5:12

Yeah, there were students who were certainly misled, but then a lot of those who learned to take advantage of the system and organized crime groups who did as well. But the other big thing is it created a massive demand for housing.

SPEAKER_00 5:24

Yeah, absolutely. And to be clear, it was actually very rarely the newcomers who were buying housing, but all of these students needed somewhere to live. So investors started buying up a massive number of single-family homes and renting them out to students. Now, at some level, that that's not a new thing. You know, as long as there's been college and university students, you have single-family homes being rented to them. But the scale and scope here was different. And municipalities largely didn't see it coming. And even when they did, if our population counts are overestimating the number of individuals who are returning back to their home countries, it's going to cause municipalities to underestimate the need for housing and other important services like transit. Sabrina, your column connects this to a broader question of trust, you know, that fraud in one area is infecting others. Now, you're someone who covers politics and public institutions. Do you think there's a real risk that immigration fraud bleeds into broader erosion of civic trust? Or, you know, is that a stretch on my part?

SPEAKER_02 6:24

No, not a stretch at all. There's more than a risk. It's already happening. It's already happened and it will continue to happen if something significant doesn't change and trust is restored. Canada is historically a high trust society where people generally assume institutions are functioning and rules apply equally. But when fraud is visibly unpunished, and in this case, actually rewarded with approval on other applications, it signals to everyone that the rules are optional and unfair. So why should they buy into them at all or trust in the government? Now we're already seeing this in other domains. Scams, cheating, benefit fraud are all becoming more normalized. Immigration fraud just doesn't exist in a vacuum.

SPEAKER_00 7:04

So what are the political implications of all this?

SPEAKER_02 7:07

When fraud becomes a wedge issue, it tends to produce overcorrections that hurt people who are complying. So the legitimate students and workers who did follow every rule. The question isn't whether Canadians are going to notice this is going on. Like I said, they already have. The question is whether the government acts in a way that restores confidence or just changes the headline. And if they don't, you're also going to have that continued broader disillusionment in the system. And you can even have run-on effects where if people think newcomers aren't here legitimately or they're involved in fraud or crime, you can even go as far to see, you know, vigilanteism rise in the future. So there are some really nasty outcomes down the road if the government doesn't restore faith and trust in the system. Now, the AG report noted the government has zero visibility into whether students actually leave when their permits expire, which is absurd. So for one sample group of about 40,000 students whose visas expired in 2024, only 40% were confirmed to have departed. What does it say about systems integrity that it can't answer such a basic enforcement question?

SPEAKER_00 8:11

It's a big, big problem. Now, historically, Canada's lacked exit tracking when crossing a border, uh, though the Canadian government's instituted a number of reforms over the recent years. But the lack of a robust system for monitoring and tracking departure confirmations and linking that data to permit expiry does create a substantial vulnerability, which the AG highlights. Now, compared to how other countries handle permit expiry, you know, most actually have some form of departure confirmation. So the 40% departure confirmation figure means that the government genuinely doesn't know the size of the unauthorized population when it comes to international student permit expires. And the AG's point that this SDS stream has, I quote, created new risks for study permit extensions means that the problem compounds because fraudulent entrants don't just disappear, they find pathways to stay. And you argue in the piece that the fix has to be retroactive, and that in I'm going to quote you here, enforcement starts now isn't enough. Now, I would say politically that's a difficult ask, though that's more your area than mine. Uh, you know, so what does retroactive accountability actually look like here? And why do you think it's necessary rather than just moving forward with better systems?

SPEAKER_02 9:31

Well, you can't restore trust in the system if you just say, okay, we're going to let all these people who are staying here fraudulently and are perhaps even here associated with organized uh crime groups to just stay. Uh, there are public safety risks. There's also just the trust in the system in general, and the fact that um we don't have oversight into how many people are here, which has implications again on housing. So, in my mind, people who didn't respond to IRCC requests need to be tracked down and non-response can't be treated as resolution. Anyone confirmed to have used fraudulent documents should be barred from applying to other immigration streams permanently. That's a 101 basic thing that I think should be obvious. Because right now, many of them are in their approval queue for other programs. So let's just nip that in the bud. Also, expired permit holders need to be identified, and those who can't account for their status should be required to leave within a very reasonable time frame. I'm talking, you know, 30, 60 days. Without retroactive action like this, the message is fraud before date X has no consequences. And that's just a standing invitation for more fraud. Now you're right in that this is politically uncomfortable because it does mean acknowledging the scale of what happened. But the alternative is just letting the integrity problem continue to compound. Now, let's zoom out for a second. The government's instinct has been to manage this by cutting immigration targets and just leaving it at that. Is that actually the right lever, or does it miss the point of what the AG report found?

SPEAKER_00 11:02

I do think it was necessary to scale back on some of these programs, including reducing uh the permanent residency targets and putting uh some caps on international students and other programs. But we should be very clear about this that the cutting numbers, while it addresses the capacity argument, it doesn't address the enforcement one. If you reduce targets but maintain the same inspection to flag to case ratio, you really just shrunk the pool while leaving the integrity problem intact. The AG's findings are really about institutional culture and resource allocation. The IRCC didn't investigate because it didn't prioritize investigation. It wasn't a key priority. Now, you can have lower immigration numbers and still have a department that closes fraud cases because nobody responded to an email. That's a problem. The fix has to be enforcement infrastructure with meaningful investigations, exit tracking, interagency coordination with the CBSA, and real consequences for third parties facilitating fraud. Target cuts may be a reasonable separate policy conversation, but they're not a substitute for enforcement reform.

SPEAKER_02 12:13

Yeah. Cuts are only the start. And certainly, if we do want to see higher immigration return in the future, once it is more sustainable, enforcement needs to be addressed now. Thank you everyone for watching and listening. And to our producer Meredith Martin and our editor Sean Foreman.

SPEAKER_00 12:28

If you have any thoughts or questions about being an international student, I've been an international student in two different countries. So please send us an email to missing middle podcast at gmail.com.

SPEAKER_02 12:38

And we'll see you next time.