Combatting Money Laundering
Date: May 19, 2020
Classification: UNCLASSIFIED
Branch/Agency: CSCCB
Proposed Response:
- Our government is committed to combatting money laundering, as clearly demonstrated in Budget 2019.
- The Government of Canada is actively engaged in multiple international and regional fora with a focus on anti-money laundering (AML)/anti-terrorist financing (ATF) efforts. These engagements are strategically significant due to the transnational nature of money laundering (ML)/terrorist financing (TF) activities and the organizations involved.
- Canada maintains numerous bilateral and multilateral commitments in combating money laundering and terrorist financing. These commitments help Canada share information and best practices with international AML/ATF partners, strengthen Canada’s AML/ATF regime, and align Canadian efforts with other countries around the world.
- We engage with our five eyes partners; with the Financial Action Task Force (FATF) which is the global money laundering and terrorist financing watchdog; our Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is also a member of the Egmont Group which consist of Financial Intelligence Units from across the world. In addition, we are active in multiple regional fora, such as the Organization of American States, which address money laundering issues.
Background:
The Anti-Money Laundering Regime (AML) was established in 2000, with the Anti-Terrorist Financing (ATF) mandate being added in 2001. The Regime’s legislative framework is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act combined with operational powers under various standing authorities (e.g. the Criminal Code, Customs Act, United Nations Act). This is the main framework for addressing money laundering in Canada, and an important and highly effective tool for blocking access to the financial system by organized crime groups, disrupting organized crime activities and protecting the integrity of the Canadian financial sector.
The AML/ATF is a horizontal initiative involving more than 13 departments and agencies, including Public Safety (PS) and PS Portfolio agencies, such as the RCMP, CBSA and CSIS. The Regime’s work is coordinated through an ADM-level Committee co-led by the Department of Finance and Public Safety Canada.
Budget 2019 made several commitments to combat ML by investing in new projects as well as directing additional funding among government partners, including:
- RCMP received funding of $68.9 million over five years to strengthen federal policing operational and investigative capacity. Ongoing funding of $20.0 million was also directed to the RCMP. Subsequent to Budget 2019, Ministers Morneau and Blair announced an additional $10M for the RCMP to invest in, “IM/IT infrastructure and digital tools to pursue complex financial crimes.”
- PS received $24 million over five years for a pilot initiative to create the Anti-Money Laundering Action, Coordination and Enforcement (ACE) Fusion Team. This team includes members from RCMP, FINTRAC, CRA, OSFI, PSPC and PS. The ACE Team is currently in its design phase, and will be operational by April 2021.
- CBSA received 28.6 million over four years and $10.5 million in ongoing funding to create the Trade Fraud and Trade-Based Money Laundering Centre of Expertise.
- Department of Finance received funding to strengthen the regime.
Canada is also actively involved in international efforts to combat money laundering and terrorism financing. The Regime is a member of the Financial Action Task Force (FATF), an intergovernmental body that sets global standards for AML/ATF whose goal is to strengthen the integrity of the global financial system. In 2015-16, the FATF conducted an evaluation of Canada against its technical compliance and effectiveness standards. The resulting report found that Canada has a strong set of anti-money laundering and anti-terrorist financing legislation and regulations. However, a number of weaknesses were identified, including that some types of businesses are not covered by the regime, there is a lack of availability of accurate beneficial ownership information and its use by competent authorities, and there is a need for greater resourcing devoted to money laundering investigations and prosecutions.
British Columbia (B.C.), in particular, has been focusing its efforts to address money laundering in the province. On September 27, 2018, the province announced a review of vulnerabilities in the real estate and financial sectors and provided specific case examples as a way of illustrating to the public the ways in which money is being laundered. Specific to this, the B.C. and Federal governments have created an ad-hoc working group whose mandate is to enhance communication, information sharing, and alignment amongst relevant operational and policy partners to explore and better address issues and risks related to fraud, money laundering, and tax evasion through real estate in B.C.
On May 15th, 2019, the Government of B.C. announced a public inquiry into money laundering, headed by B.C. Supreme Court Justice Austin F. Cullen. The inquiry is examining money laundering in B.C. in the financial, real estate, gaming, corporate and professional sectors. The Commission of Inquiry into Money Laundering kicked off in October 2019 with province-wide public meetings, giving the public an opportunity to provide their input regarding their issues and concerns. Federal officials from Public Safety Canada, the RCMP, and the Department of Finance Canada have provided briefings to the commission.
The Minister’s mandate letter identifies the importance of working with the Minister of Finance and other Cabinet colleagues to continue the development of policies and legislation aimed at reducing organized crime and gang activity, including money laundering. On January 22, 2020, federal, provincial and territorial (FPT) ministers responsible for justice and public safety concluded a one-day meeting to discuss key priorities of Canadians, which included discussion of money laundering and Ministers reiterated their support for a coordinated approach to better address this problem.
Contacts:
Prepared by: Fadi W. Balesh, Manager, 343-551-2784
Consulted: NSPD: Carrie Hagerman, Director, 613-971-2215
Approved by: Trevor Bhupsingh, A/ADM, 613-991-4281
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