Intelligence

Agency finds dirty money

The Globe and Mail

The fledgling agency set up by Ottawa to crack down on money laundering and terrorist financing has uncovered $500-million in suspected dirty money stashed away in Canadian banks, mutual funds and other financial institutions.

The agency, known as the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, has passed on about 130 leads to the RCMP and other law enforcement officials since April, 2002, said Sandra Brown, one of its senior officers. Nearly one-third of those leads are linked to terrorist financing, she said.

Most of the allegedly illicit funds have been funnelled through banks and other deposit-taking institutions, Ms. Brown said at a conference yesterday sponsored by the Investment Funds Institute of Canada, a trade group for the mutual fund sector. She said mutual fund companies were also used as conduits in two instances.

Ms. Brown said in an interview following the conference that she does not know whether any of the accounts containing the suspected illicit funds have been frozen because Fintrac has no further involvement once it refers the information to law enforcement agencies. "Proceeds of crime investigations are very lengthy processes, so none of those leads has yet resulted in a prosecution," she said.

The $500-million figure is for the fiscal year ended March 31, 2003. "I'm sure we've uncovered a lot more since then," Ms. Brown said. The tally does appear to be on the low side when compared with the $17-billion worth of criminal proceeds that the federal government says are laundered through Canada every year.

The Sept. 11, 2001, terrorist attacks on the United States spurred countries around the world to intensify their efforts to crack down on attempts by criminal groups -- including terrorists -- to raise and launder money. For its part, Canada was forced to speed up its efforts to combat money laundering amid heightened criticism of its performance to date.

The federal government did so in the fall of 2001, by taking steps to accelerate long-delayed regulations to enable a new government agency designed to ferret out dirty money to get on with its job. Fintrac was created at that time, but Ottawa took more than a year developing its regulations.

The rules require financial institutions, brokerage firms, real estate agents, casinos and lawyers to report large cash transactions -- defined as anything over $10,000. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act was phased in between October, 2001, and March, 2003.

Under the legislation, the companies that handle large amounts of cash must also report all international electronic fund transfers over $10,000 as well as all suspicious transactions. Failure to do so can result in fines as high as $2-million and possible jail terms.

Fintrac, in turn, has a mandate to collect information on suspected money laundering and terrorist financing activities. It collects between 10 million and 15 million pieces of information a year and passes on leads to the police for investigation once it has reasonable grounds to suspect that the funds consist of the proceeds of criminal activities, Ms. Brown said. "We point fingers in the right direction, where they should look to start their own investigation."

The leads include both companies and individuals involved in suspected money laundering and terrorist financing, she said.

Businesses and industries that routinely deal with large sums of money, including financial institutions, life insurance companies, casinos, legal, accounting and real estate firms, are susceptible to infiltration by terrorist groups and organized crime syndicates, says the federal Solicitor-General's office on its Web site.

"Whether it's money laundering, car theft, human smuggling or illegal trafficking, these activities associated with organized crime come with a significant social and economic price tag," the Solicitor-General's office says. "It is estimated that organized crime costs Canadian taxpayers well over $100-billion each year."

Kelly Shaughnessy, vice-president of banking operations at the Canadian Bankers Association, said yesterday that the industry has a long history of co-operation. "We continue to co-operate with both Fintrac and law enforcement agencies to combat money laundering and terrorist activities."

September 13, 2003 at 10:16 AM in CIA | Permalink | Top of page | Blog Home