Canada is a haven for financial crime. This must be stopped

Canada is envied around the world as a great place to visit and an even better place to live, thanks to its political stability, strong economy, welcome to refugees and other oppressed peoples – and sadly, its welcoming approach to those who engage in money laundering and financial crime.

The latest damning evidence of Canada’s benevolence to financial crime comes courtesy of Austin Cullen, the B.C. Supreme Court justice who led a three-year commission to investigate money laundering in British Columbia and Canada.

Cullen delivered his huge 1,800-page report and 101 recommendations last week detailing failures at the federal and provincial levels. Some of its findings and recommendations are unique to British Columbia, but most are of national interest and should be addressed by Ottawa and other provincial governments.

Cullen first notes that the federal anti-money laundering regime is ineffective, in large part because of the failings of the Financial Transactions and Reports Analysis Center of Canada (FINTRAC), the agency responsible for monitoring money laundering threats and communicating with law enforcement.

Thanks to a focus on “defensive” reporting, FINTRAC receives a huge number of potential money laundering reports – a dozen times more than similar agencies in the US and 96 times more than those in Britain .

Needless to say, most reports are inconsequential: of the 31 million reports received in 2019-20, FINTRAC only disclosed 2,057 to law enforcement agencies.

And when police, both federal and local, receive information about a potential money laundering, they are rarely given priority. From 1990 to 2012, the RCMP maintained Integrated Proceeds of Crime (IPOC) units dedicated to money laundering and proceeds of crime investigations. But the RCMP disbanded the units in 2012, thanks in part to a shift in focus from the federal government to national security. As a result, money laundering investigations have taken a back seat.

Cullen notes that many local police investigations also suffer from poor results due to failure to consider charges of money laundering and proceeds of crime when investigating for-profit criminal activities such as trafficking. drug.

Because of these police failings, Cullen recommends the creation of a dedicated British Columbia Money Laundering Investigative Unit. Such provincial units could indeed prove beneficial, but they should be complemented by the re-establishment of RCMP IPOC units, as federal and provincial police must work together to tackle what are often trans-provincial crimes.

Similarly, in light of the overall ineffectiveness of FINTRAC and the federal anti-money laundering regime, Cullen recommends the creation of a provincial anti-money laundering commissioner. This too could prove useful, but changes at the federal level are also essential.

The most recent budget provides $200 million over four years for the creation of a new Canadian Financial Crimes Agency, which will bring together the expertise of the RCMP, FINTRAC and the Canada Revenue Agency to investigate money laundering and other complex crimes. This new agency could prove particularly effective in liaising with provincial anti-money laundering commissioners.

Finally, Cullen addresses the issue of “snow-washing” – the practice of financial criminals hiding their identities and transactions through front companies. Proponents have been calling for years for the creation of a beneficial ownership registry, which would allow anyone to know the identity of the true owners of the companies.

The federal government has pledged to establish a registry by the end of next year, and the provinces are expected to do the same for provincially incorporated businesses.

Cullen notes that money laundering is rooted in crimes that oppress others, such as drug trafficking, human trafficking, and fraud. We must redouble our efforts to combat this scourge, so that Canada can regain its reputation as an international refuge for the oppressed rather than the oppressors.

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