Canada’s Anti-Money Laundering and Terrorist Financing Regime: A Comprehensive Approach
OTTAWA - Canada’s anti-money laundering and terrorist financing (AML/ATF) regime is a comprehensive framework designed to prevent, detect, and disrupt the illegal activities of money launderers and terrorists. The regime is governed by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which requires financial institutions, certain non-financial businesses and professions, and other reporting entities to implement effective AML/ATF programs.
Reporting Entities: The Backbone of Canada’s AML/ATF Regime
Under the PCMLTFA, reporting entities are required to:
- Identify their clients
- Keep records
- Establish and administer an internal AML/ATF compliance program
- Report suspicious transactions, large cross-border currency transfers, and other prescribed transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
FINTRAC is responsible for analyzing this information and disseminating it to regime partners to support investigations and prosecutions.
International Cooperation: A Key Component
Canada plays a key role in international cooperation, working closely with its partners to share intelligence and best practices. Canada is a founding member of the Financial Action Task Force (FATF), which develops international standards for AML/ATF compliance.
Prevention and Detection: Strengthening Measures
The second pillar of Canada’s AML/ATF regime focuses on preventing individuals from placing illicit proceeds or terrorist-related funds into the financial system. Reporting entities are at the center of this approach, implementing prevention and detection measures under the PCMLTFA. FINTRAC conducts regular assessments of federally regulated financial institutions to promote compliance with the law.
Greater Transparency: A Key Prevention Measure
Transparency is essential in preventing money laundering and terrorist financing. Canada’s regime requires greater transparency from corporations and trusts, including the identification of beneficial owners. This information is made available to relevant law enforcement agencies and authorities on a timely basis.
Disruption: Investigating and Prosecuting Offences
The final pillar of Canada’s AML/ATF 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 these crimes. The Canada Revenue Agency (CRA) also plays a critical role in investigating tax evasion and detecting charities that may be involved in illegal activities.
FINTRAC Case Disclosure: A Snapshot of the Regime’s Effectiveness
Chart 1 below provides a snapshot of FINTRAC’s case disclosure from 2015-16 to 2019-20. In 2019-20, FINTRAC made 2,057 disclosures to regime partners, with 1,582 associated with money laundering and 296 related to terrorist activity financing.
Chart 1: FINTRAC Case Disclosure from 2015-16 to 2019-20
Conclusion
In conclusion, Canada’s anti-money laundering and terrorist financing regime is a comprehensive framework that requires cooperation among reporting entities, law enforcement agencies, and other stakeholders. The regime’s effectiveness is evident in the significant number of cases disclosed by FINTRAC to partners over the years.