Bank regulator takes hard line against money laundering

"Any product, be it a deposit product or a loan product such as a mortgage, if it can be used to launder dirty money, it should be subject to strong [anti-money laundering] provisions."

The Globe and Mail
November 9, 2005

Bank regulator takes hard line against money laundering
Janet McFarland

Some smaller financial institutions in Canada have "hesitated" to comply with their requirements to detect and stop money laundering, Canada's top banking regulator said yesterday.

Nick Le Pan, the head of the Office of the Superintendent of Financial Institutions, told a Toronto audience that Canada has made progress on stopping money laundering and terrorist financing activities, but that more needs to be done because criminals target countries with weak standards.

"It is a threat to security, because money laundering is linked to organized crime," he said. "And it is a threat to the safety of the financial system because institutions that are knowingly or unknowingly associated with money laundering will suffer damage to their reputation."

Mr. Le Pan, the federal superintendent of financial institutions, made his comments to an audience of financial services executives attending a closed-door conference on money laundering. His speech was the only part of the day's events open to the media.

Following his remarks, Mr. Le Pan told reporters that officials from the bank regulator have met with board directors of some smaller financial institutions and discovered they remain unaware of the risks of money laundering. He said ignorance of rules to prevent laundering is unacceptable.

"We will come down hard on entities with material problems that should have been identified by them and rectified well before we brought them to light," he said.

Mr. Le Pan said some institutions are taking a "narrow" approach to implementing systems to detect money laundering and said this is also unsatisfactory. "Any product, be it a deposit product or a loan product such as a mortgage, if it can be used to launder dirty money, it should be subject to strong [anti-money laundering] provisions."

Canada's FINTRAC centre, which monitors financial transactions to detect money laundering, referred about $2-billion worth of suspected laundering to law enforcement authorities last year.


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