Social media giant Facebook committed "serious contraventions" of Canadian privacy laws, the country's data watchdog says.
The federal privacy commissioner said the tech firm had also failed to take responsibility for protecting personal information.
An investigation into the company was launched in the wake of the Cambridge Analytica data scandal.
Facebook disputes the investigation's findings.
"The stark contradiction between Facebook's public promises to mend its ways on privacy and its refusal to address the serious problems we've identified - or even acknowledge that it broke the law - is extremely concerning," privacy commissioner Daniel Therrien said in a statement.
Mr Therrien said his office planned to go to court "to seek an order to force the company to correct its privacy practices".
His office can currently only issue recommendations and cannot impose fines for non-compliance.
Facebook said in a statement that it had engaged "in many months of good-faith co-operation and lengthy negotiations" with the commissioner's office and is disappointed that the matter is going to court instead of "continuing collaborative discussions".
What was the Cambridge Analytica scandal?
Cambridge Analytica was a political advertising firm that had access to the data of millions of users, some of which was allegedly used to psychologically profile US voters.
The data was acquired via a personality quiz. The quiz on Facebook invited users to find out their personality type.
As was common with apps and games at that time, it was designed to harvest not only the user data of the person taking part in the quiz, but also the data of their friends.
The social media firm has said it believes up to 87 million people's data was improperly shared with the political consultancy firm, now defunct.
The tech giant has faced increasing scrutiny by legislators and regulators in the US, the UK and elsewhere in the last few years over issues related to data privacy.
Last October, Facebook was fined £500,000 ($645,000) by the UK's data protection watchdog for its role in the Cambridge Analytica data scandal.
Facebook also faces potential massive fines from US regulators.
The commissioner's report says that over 650,000 users in Canada either installed the third-party quiz app or, in the case of the overwhelming majority, were Facebook friends with someone who did.
The tech giant said it found no evidence that Canadian user data was shared with Cambridge Analytica.
What did Canada's privacy commissioner find?
The investigation - launched in March 2018 - found that Facebook had failed to obtain valid and meaningful consent from users and their online friends, the privacy commissioner's office said in the report released on Thursday.
Facebook, it said, had lacked adequate safeguards to protect user data and had failed to be accountable for the user data under its control.
The privacy commissioner's office recommended the company allow for an audit of its privacy policies and practices over the next five years, and ensure it obtains "meaningful consent" from users installing third-party apps.
The firm said that it had already made improvements to its platform to protect user data before the release of the Canadian commissioner's report, including by limiting third-party app access.