There are signs the government is waking up to the risk of financial crime, despite Ottawa's history of poor results.JONATHAN HAYWARD/The Canadian Press
John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.
François-Philippe Champagne, the federal Finance Minister, is a man of action. Mr. Champagne executed in months what dragged on for some years under previous Liberal finance minister, Chrystia Freeland. At least that is what he would have us believe.
Last Monday, he announced Canada would start polishing the tarnish off its reputation on financial crime prevention. The long-promised Financial Crimes Agency is on its way. The agency, with a dedicated, specialized force, is expected to more effectively target the estimated $45-billion to $113-billion laundered annually in Canada by illegal drug traffickers, human traffickers and scam artists defrauding the elderly and vulnerable.
First broached in the 2021 federal Liberal election-campaign platform, then promised in the Liberals’ 2022 budget, then backburnered, Mr. Champagne was asked, “Why now?” Because “I’m taking that over now,” he told reporters, “so it’s going to happen.” What exactly is going to happen is worth asking because what typically happens hasn’t worked.
Money laundering is a process criminals use to disguise proceeds from crime. This is accomplished by placing and integrating those proceeds into the legitimate financial system and economy. The easier it is to launder money, the more crime pays.
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The Financial Crimes Agency isn’t the first venture in this field but the most recent. The last “new” idea that received millions in funding to address financial crime, the Financial Crime Coordination Centre and its RCMP Federal Financial Crime Team, was established in 2019 and became fully operational in April, 2021.
If that sounds a lot like a Financial Crimes Agency by another name, you see my point.
Creating the Centre and the RCMP Financial Crime Team in 2019 was inspired in large part by growing concerns in Canada and abroad that this country is an easy mark for criminals intent on laundering illicit funds.
In 2016, the Financial Action Task Force, a global intergovernmental, standard-setting organization that targets financial crime, delivered its assessment of Canada’s contribution to that battle. Of the 33 conditions countries should fulfill to effectively fight money laundering, terrorist financing, corruption and fraud, Canada was “compliant with 11 recommendations and largely compliant with 23 of them.”
A stellar grade this was not. At the same time as Canada’s assessment, the FATF reported that the U.S. “aggressively pursues high-value confiscations and has been very effective, ([collecting] over US$4.4-billion in 2014),” and averaged about 1,200 money laundering criminal convictions per year.
Between 2000 and 2014, Canada managed 43 convictions for money laundering. Between 2014 and 2020, an analysis by Ottawa showed “only one federal conviction or guilty plea” and “very few forfeitures in connection with money laundering charges.”
When criminals are convicted of money laundering in court, the punishment too often consists of nominal fines and conditional sentencing, meaning no jail time and limited financial penalties.
Despite a history of poor results, signs exist that Ottawa is waking up to the serious risk financial crime poses in Canada and its effect on the country’s reputation as a place to do business.
Regulatory changes in 2023 and 2024 aimed at those who facilitate money laundering are yielding results today. Last week, FinTRAC imposed a $176.9-million financial penalty against a Vancouver-based crypto-exchange firm for a litany of alleged failures to report suspicious transactions, the largest fine FinTRAC has ever dished out. Such a fine is material.
When asked what success would look like for Canada’s Financial Crimes Agency, the president and chief executive officer of the Canadian Bankers Association, Anthony Ostler, told me, “Success should be measured by the reduction of scams and better protection for Canadians.”
I queried Mr. Ostler because Canadian bankers have been especially frustrated with the federal government’s previous milquetoast efforts on money laundering, which they characterized in 2024 as a “high-volume, low-value-reporting” process that did little to deter money laundering or punish the guilty.
If that is to change, Canadian bankers believe the Financial Crimes Agency needs to “undertake both investigative and prosecutorial roles of complex financial crimes and provide statistics to public and private stakeholders on investigations, prosecutions, convictions and asset forfeitures in Canada.”
To make an appreciable dent in money laundering, Mr. Champagne would do well to ensure that what bankers are calling for is what is “going to happen” when the Financial Crimes Agency opens its doors.