Regime Seeks Balance Between Anti-Money Laundering Efforts and Private Sector Costs
Ottawa, Canada - A Step Towards Striking a Balance
The Canadian government is taking proactive measures to strike a balance between reducing money laundering and terrorist financing risks in the country’s economy and minimizing the compliance costs placed on private sector entities.
Establishing an Advisory Committee
To achieve this goal, the government has established the Advisory Committee on Money Laundering and Terrorist Financing (ACMLTF). The committee brings together representatives from various sectors, including finance, non-profit organizations, and reporting entities. The committee meets twice to three times a year to provide input on policy-making and legislation related to anti-money laundering (AML) and terrorist financing (ATF).
A Balanced Approach
“This is an important step in our efforts to combat money laundering and terrorist financing,” said a government official. “We want to make sure that our regulations are effective, but also reasonable and proportionate to the risk.”
Strengthening Relationship with Private Sector
The committee has already contributed to the development of new regulations aimed at reducing the administrative burden on private sector entities while maintaining the government’s policy intent.
In addition, the government is working to strengthen its relationship with the private sector through regular outreach activities. FINTRAC, Canada’s AML/ATF regulator, has finalized a new five-year Compliance Engagement Strategy, which sets priorities for its engagement activities. In 2019-20, FINTRAC undertook 166 outreach and engagement activities, including:
- Working groups
- Conferences
- Presentations
- Training sessions
- Meetings with businesses and stakeholders
Effective Compliance Depends on Understanding ML/TF Risks
“We understand that effective compliance depends on reporting entities understanding their respective ML/TF risks and obligations under the PCMLTFA,” said a FINTRAC official. “That’s why we’re committed to providing guidance and support to help them better understand and comply with their obligations.”
Improving Awareness Among High-Risk Sectors
The government is also working to improve awareness among real estate, casino, and money services business sectors, as well as other industries that may face greater obstacles in understanding their ML/TF risks and staying up-to-date on evolving PCMLTFA obligations.
Increased Transaction Reporting
In related news, FINTRAC received an increasing amount of transaction reporting from reporting entities, particularly suspicious transaction reporting, with volumes having steadily grown over the past decade. This provides FINTRAC with more information that can be turned into actionable tactical and strategic intelligence. However, the greater demand can potentially affect operational output due to available resources and analytical capacity.
A Balanced Approach is Crucial
The government is committed to combating money laundering and terrorist financing, but recognizes the need for a balanced approach that takes into account the costs and challenges faced by private sector entities. By working closely with stakeholders, the government aims to create an environment where businesses can thrive while also protecting the integrity of the financial system.
“We’re committed to making sure that our regulations are effective, proportionate, and reasonable,” said the government official. “We want to make sure that we’re striking the right balance between anti-money laundering efforts and private sector costs.”