Financial Crime World

Consequences of Financial Crime in Canada Emerge as Report Reveals Widespread Non-Compliance with Anti-Money Laundering Laws

Introduction

A recent report from Canada’s financial crimes watchdog, the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), has uncovered widespread non-compliance with anti-money laundering laws among banking and real estate companies. This report highlights the alarming lack of compliance in these sectors and the need for greater oversight and higher fines to prevent financial crime.

Findings of the Report

The 2022/2023 FinTRAC report found that only 106 out of 237 financial institutions complied with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The report audited financial services and real-estate companies, among other sectors, but did not name any individuals or companies.

  • Only 78% of financial entities had anti-money laundering policies and procedures in place.
  • In the real-estate sector, 61 out of 71 firms had incomplete or no anti-money laundering policies.
  • FinTRAC found that many reporting entities lacked screening for potential criminals or sanctioned persons.

Consequences of Non-Compliance

Experts warn that the consequences of not complying with anti-money laundering laws can be severe. Money laundering and terrorist financing enable organized crime and terrorism, and have real costs for individuals and communities.

  • “Money laundering and terrorist financing have real costs for us,” said Jessica Davis, president of Insight Threat Intelligence. “They enable organized crime and terrorism.”

Compliance Measures

FinTRAC has introduced new compliance measures to address the issue of non-compliance. These include:

  • A “Report Card” system, which allows businesses to correct errors related to anti-money laundering compliance as they occur.
  • Increased penalties for violating Canada’s anti-money laundering laws, resulting in a 100% increase over the past fiscal year.

Expert Opinion

Experts agree that fines currently being handed out are insufficient and need to be significantly higher to make businesses take these issues seriously. “If they’re not, they really have no incentive to have a robust compliance regime,” said Davis.

  • “Fines currently being handed out are a rounding error for some of Canada’s largest banks.”
  • “Fines need to be in the tens of millions of dollars to make businesses take these issues seriously.”

Conclusion

The consequences of financial crime in Canada are far-reaching and can have devastating effects on individuals and communities. As the country prepares for its upcoming evaluation by the Financial Action Task Force (FATF), it is clear that more needs to be done to combat money laundering and terrorist financing. Greater oversight, higher fines, and increased compliance measures are necessary to prevent financial crime and protect Canada’s economy.