Canada a haven for dirty money, conference told

“They know it’s very easy to get away with crime in Canada,”…In the 1990s, Canada came close to having its name included on an international blacklist of unco-operative jurisdictions for failing to take sufficient steps to stamp out money laundering…“Canada was known as the Maytag of the Western world.”

The Globe and Mail
May 5, 2004

Canada a haven for dirty money, conference told
Privacy rules, banking system attract money laundering, terrorist financing
Karen Howlett

Money launderers are attracted to Canada because of the country’s lenient prison terms for criminals, strong banking system, and privacy laws that allow the proceeds of crime, said Sandra Brown, senior officer at the fledgling agency set up by Ottawa to crack down on money laundering and terrorist financing.

The agency, known as the Financial Transactions and Reports Analysis Centre or Fintrac, suspects that terrorist groups moved $22-million through Canadian financial institutions last year.

“They know it’s very easy to get away with crime in Canada,” Ms. Brown said at a conference sponsored by the Investment Funds Institute of Canada, a trade group for the mutual fund industry. “They know sentences are not stiff.”

Fintrac has uncovered $500-million in suspected dirty money stashed away in Canadian banks, mutual funds and other financial institutions as of its latest fiscal year, which ended March 31, 2003.

The tally appears to be on the low side compared with the $17-billion worth of criminal proceeds that he federal government says are laundered through Canada every year. In an interview following her remarks, Ms. Brown said she could not provide more current figures.

Fintrac was created by the federal government in 2000 to help uncover illegal financial activities. However, it has been only in the past year-and-a-half that he government completed the reporting requirements for a wide variety of entities, including banks, brokerage firms, mutual funds, real estate agents and casinos.

The federal government beefed up the country’s money-laundering laws following pressure from the international community.

In the 1990s, Canada came close to having its name included on an international blacklist of unco-operative jurisdictions for failing to take sufficient steps to stamp out money laundering, Ms. Brown said. “Canada was known as the Maytag of the Western world.”

The Financial Action Task Force, a Paris-based agency backed by most of the world’s industrial nations, including Canada, every year singles out countries that are money-laundering havens.

Canada came close to making the blacklist after its first attempt at creating proceeds-of-crime legislation in the early 1990s, Ms. Brown said in an interview.

The task force considered the legislation too weak, she said. Canada was told “you’ve got to pull up your socks,” she said. “We were not seen all that favourably. We weren’t doing our share.”

Under the legislation now in place, financial institutions must report all transactions over $10,000 and any suspicious transactions. Fintrac collects between 10 and 15 million pieces of information every years, and passes on any suspicious cases to the RCMP and other law enforcement agencies.

Less than 1 per cent of the entities that report to Fintrac have no intention of complying with the rules, Ms. Brown said. She said the agency is considering referring one matter to the RCMP because the entity involved treats enforcement “like a joke.”

Fintrac will now be able to share information with other regulators under new legislation that took effect last week. Until now, other regulators have been able to share problems they detect with Fintrac, but the agency has been unable to share its findings with others, she said. “It’s been a one-way street.”


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