Money launderers are staying ahead of Canada's effort to catch them: Senate

OTTAWA – Canada is losing the battle against money laundering and terrorist financing, according to a new Senate Committee report.

Money laundering in Canada in 2011 was estimated to be worth between $5 billion and $15 billion, and 287 cases of terrorist financing were uncovered between 2007 and 2011.

The Senate Committee on Banking, Trade and Commerce came to their conclusion after a year-long review of Canada’s mechanisms for combating money laundering and terrorist financing.

The committee found Canada’s policies to be lagging behind the criminals they are supposed to be catching.

“I feel that currently we are not getting full value for our efforts, given the time, money and other resources that are being allocated to this problem,” said Senator Celine Hervieux-Payette, Deputy Chair of the Committee.

It recommended that a supervisory body, led by the Department of Finance, be established to keep a closer eye on Canada’s anti-money laundering and terrorist financing regime. This body would update Parliament annually in regards to its investigations, prosecutions and spending.

Financial institutions must currently report transactions exceeding $10,000. The committee recommended that this threshold be eliminated for international electronic transfers. Funding of terrorism is often done with multiple deposits of smaller sums of money.

The committee also suggested that this body could funnel seized money into a special fund used to finance anti-laundering efforts, effectively using the launderers’ money against them.

Money laundering is the process whereby illicitly produced money is made “clean,” and much harder to trace. The practice is often linked to terrorism, drug trafficking and organized crime. It’s been a criminal offence in Canada since 1989.

Since then money laundering has become much more international and Canada’s counter-measures have struggled to keep up. In recent years, debit and credit card fraud has been gradually overtaking mass marketing fraud.

Canada’s anti-money laundering legislation was updated and expanded in 2000 and a new independent financial intelligence unit was created — The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). FINTRAC gathers and analyses information from financial agencies, casinos and other entities and gives relevant information to law enforcement and intelligence agencies.

Anti-laundering legislation was amended to focus more on combating terrorist financing following the September 2001 terrorist attacks in the United States.

FINTRAC notes that fraudulent investment schemes are more common in difficult economic times.

The International Monetary Fund reports that laundering accounts for two-to-five per cent of global Gross Domestic Product, or up to US$2 trillion.