As reported in the Globe and Mail today, the federal government is about to introduce a bill proposing amendments to current anti-money laundering legislation. This comes on the heels of a Senate committee report, released two days ago, in which alarm was raised as to the size and scope of the problem in Canada (see October 3 blog entry), and yesterday's annual report by the Financial and Reports Analysis Centre of Canada (FINTRAC), the body that oversees the collection and analysis of data regarding large cash transactions and suspicious transcations. The FINTRAC report states that the body disclosed information to police over the past year regarding 142 transactions totalling $2 billion.
A big unknown is whether the government is going to attempt to bring lawyers within the anti-money laundering regulatory scheme. The Globe and Mail lists a number of anticipated amendments, but none concerns lawyers. By contrast, the Senate committee recommended that lawyers be subject to the client-identification, information-collection and reporting provisions of the legislation. It remains to be seen exactly what, if anything the government intends to do with respect to lawyers. Stay tuned.
Continue reading to see today's Globe and Mail article.
From the Globe and Mail, October 5, 2006, p. A7
Dirty-money crackdown due this week
STEVEN CHASE
OTTAWA -- The Harper government plans legislation this week to strengthen Canada's ability to fight terrorism financing and money laundering -- on the heels of a federal watchdog's report that the value of suspected dirty cash it uncovered last year had doubled to $5-billion.
Yesterday, the Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac, said the $5-billion in suspicious transactions detected in its 2006 operating year includes more than $250-million in suspected terrorist-financing.
The overall figure is more than double the $2-billion uncovered last year and terrorist funding is up 40 per cent from the previous year.
The six-year-old agency said it's uncovering more dirty cash because it has grown experienced at detecting it and because it deliberately sought out larger-scale schemes last year.
A Senate report this week estimated tens of billions of dollars of illicit money is laundered in Canada each year.
Fintrac director Horst Intscher declined to offer his own estimate but said he believes plenty of activity remains undetected.
"I don't know how high or how deep this runs. But it's nowhere near maxing out," Mr. Intscher said.
Ottawa already requires many professions that handle large transactions to keep records on clients and to report any cash transactions of more than $10,000.
Finance Minister Jim Flaherty is expected to table a bill today or tomorrow that further toughens anti-money-laundering and terror-financing rules. Mr. Intscher said he believes the legislation will contain "pretty much most" of the recommendations laid out in a June 2005 Finance Department paper.
Proposed changes included:
Requiring dealers in gold, diamonds, precious stones and jewellery to keep tabs on clients and report suspicious transactions.
More strict monitoring of electronic money transfers.
Requiring banks and other financial institutions to report any attempted suspicious transactions, rather than only completed transactions.
Adding politicians, judges, military leaders and other "politically exposed persons" to the list of those whose financial dealings will get further scrutiny.
Registration of money service businesses such as currency exchanges, remittance companies that send cash overseas and firms that issue money order.
Establishing fines that can be slapped on those failing to comply with anti-money-laundering rules, as well as a process to publish scofflaws' names.
Asked if Fintrac has detected al-Qaeda financing activity in Canada, Mr. Intscher said his agency has probably filed reports to authorities on "all of the major suspected terrorist groups."
He said the most common form of terrorist-financing activity in Canada is fundraising and personal canvassing, where groups "go around knocking door-to-door in their communities. It looks like legitimate fundraising and then it's deposited in accounts and consolidated in other accounts."
Money laundering methods tends to vary by the underlying criminal activity that generated the illicit funds, Mr. Intscher said. Investigators find drug-trafficking money often ends up being converted to another currency. Telemarketing fraudsters rely on wire transfers.
He said a hot laundering trend is Internet payment systems through on-line services that are largely unregulated. Fintrac will be analyzing these to see if it can find ways to learn more about the transactions.
In total last year, Fintrac tipped police and security agencies to 168 suspected money-laundering and terrorist financing cases in its 2006 operating year, up nearly 20 per cent from 142 a year earlier.
Mr. Intscher said bigger-scale money laundering has grown very good at "mimicking legitimate financial behaviour" but Fintrac's growing database is helping the agency detect anomalies.
