Financial Crime World

Canada’s Anti-Money Laundering and Terrorist Financing Regime: A Comprehensive Approach

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Canada has established a robust anti-money laundering and terrorist financing (AML/ATF) regime to combat the growing threat of money laundering and terrorist financing. The regime involves ongoing monitoring of transactions, enhanced customer due diligence measures, and collaboration between federal partners.

Information Sharing Regime

The Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA) governs the reporting entities’ submission of information to FINTRAC. FINTRAC analyzes this information and disseminates the results to regime partners. This intelligence is used to support domestic and international investigations and prosecutions, as well as educate the public on money laundering and terrorist financing issues.

Key Points

  • Reporting entities submit information to FINTRAC.
  • FINTRAC analyzes and disseminates the results to regime partners.
  • Intelligence is used for domestic and international investigations and prosecutions.

Private-Public Sector Collaboration

The Advisory Committee on Money Laundering and Terrorist Financing (ACMLTF) provides a forum for private sector representatives to provide their perspective and advice on Canada’s AML/ATF regime. This collaboration fosters effective communication and results, benefiting all participants in the regime.

Key Points

  • The ACMLTF provides a forum for private sector representatives.
  • Collaboration fosters effective communication and results.

International Cooperation

Canada recognizes that many serious forms of money laundering and terrorist financing have international dimensions. As such, international cooperation is a key component of the regime. FINTRAC exchanges information with other financial intelligence units and conducts formal mutual legal assistance with partner countries.

Key Points

  • International cooperation is a key component of the regime.
  • FINTRAC exchanges information with other financial intelligence units.
  • Canada provides expertise and funding to increase AML/ATF capacity in countries with weaker regimes.

FATF Leadership

Canada plays a leading role in the Financial Action Task Force (FATF), developing international AML/ATF standards and monitoring their implementation among member countries. Canada also provides expertise and funding to increase AML/ATF capacity in countries with weaker regimes.

Key Points

  • Canada plays a leading role in FATF.
  • Canada develops international AML/ATF standards.
  • Canada monitors the implementation of these standards among member countries.

Prevention and Detection

The second pillar of the regime focuses on preventing individuals from placing illicit proceeds or terrorist-related funds into the financial system, while detecting the placement and movement of such funds. Reporting entities, supervised by FINTRAC and OSFI, play a critical role in implementing prevention and detection measures.

Key Points

  • Prevention and detection measures are implemented to prevent illicit activities.
  • Reporting entities play a critical role in implementing these measures.

Greater Transparency

Greater transparency of corporations and trusts contributes to preventing and detecting money laundering and terrorist financing. Requirements for financial institutions to identify beneficial owners, as well as provincial and federal corporate laws, registries, and securities regulations, all contribute to this effort.

Key Points

  • Greater transparency of corporations and trusts prevents and detects illicit activities.
  • Financial institutions are required to identify beneficial owners.

FINTRAC’s Role

As Canada’s financial intelligence unit, FINTRAC acts at arm’s length and is independent from law enforcement agencies. In the 2019-20 fiscal year, FINTRAC made 2,057 disclosures to regime partners, with 1,582 related to money laundering and 296 dealing with terrorist activity financing.

Key Points

  • FINTRAC is Canada’s financial intelligence unit.
  • FINTRAC acts at arm’s length from law enforcement agencies.
  • FINTRAC makes disclosures to regime partners.

Disruption

The final pillar of the regime focuses on disrupting money laundering and terrorist financing activities. Regime partners, supported by FINTRAC’s intelligence disclosures and analysis activities, undertake financial investigations in relation to money laundering, terrorist financing, and other profit-oriented crimes.

Key Points

  • The regime focuses on disrupting illicit activities.
  • Regime partners conduct financial investigations.

Conclusion

Overall, Canada’s AML/ATF regime is a comprehensive approach that involves ongoing monitoring of transactions, enhanced customer due diligence measures, and collaboration between federal partners. The regime’s three pillars – prevention and detection, disruption, and international cooperation – work together to combat the growing threat of money laundering and terrorist financing.