Financial Crime World

Canada on Verge of Establishing Agency to Combat Financial Crimes

The Canadian government is moving forward with plans to establish a new federal agency responsible for investigating and enforcing complex financial crimes. The Canada Financial Crimes Agency (CFCA) will be tasked with combating fraud, money-laundering, insider trading, and other financial crimes that pose significant risks to the Canadian economy.

Background

The Liberal Party campaigned on establishing the CFCA during the 2021 Federal Election. Two years later, the government has released a white paper outlining its plans for the agency, including its structure, mandate, and functions.

Consultation Process

A consultation titled “Strengthening Canada’s Anti-Money Laundering and Terrorist Financing Regime” seeks input on how the CFCA should be structured to enable effective investigation, prosecution, and recovery of proceeds of crime. The government is also seeking views on whether the agency’s mandate should be limited to traditional financial crimes or expanded to include “profit-motivated crimes” such as drug trafficking and tobacco smuggling.

Recommendations from Transparency International

Transparency International, a global civil society organization focused on combating corruption, has weighed in with its own recommendations on how the CFCA should be structured. In a white paper titled “Establishing a Canadian Financial Crime Agency,” they advocate for an expansive mandate that includes not only traditional financial crimes but also “predicate crimes” that create the impetus for money-laundering.

Key Recommendations

  • The CFCA should have a broad mandate to include both traditional financial crimes and predicate crimes.
  • The agency should be both an enforcement body and a coordination body, capable of working with other federal agencies to combat financial crime.
  • This approach would overcome problems created by overlapping jurisdictions and conflicting priorities, allowing for a more systematic approach to investigating and prosecuting financial crimes.

Challenges Ahead

While the government has yet to provide further details on the CFCA’s structure and mandate, experts agree that implementing a robust and powerful agency would be a significant step in strengthening Canada’s anti-money laundering and terrorist financing regime. However, concerns remain over how the agency will interact with other federal agencies and within Canada’s existing AML/TF regime.

Implications for Financial Institutions and Individuals

The establishment of the CFCA is expected to have far-reaching implications for financial institutions and individuals operating in both Canada and the US. As the agency takes shape, it remains to be seen whether it will be able to effectively combat financial crime and reduce the risks posed to the Canadian economy.

In summary, the establishment of the Canada Financial Crimes Agency marks an important step forward in combating financial crimes in Canada and beyond. While challenges lie ahead, experts believe that a robust and powerful agency would be a significant asset in strengthening Canada’s anti-money laundering and terrorist financing regime.