Bitcoin is for sale at an ATM at the Westfield Garden State Plaza shopping mall in Paramus, New Jersey, in March, 2023.Ted Shaffrey/The Associated Press
The creation of a new federal law enforcement agency focused on financial crimes signals that Canada is trying to get serious about tackling the issue, but the agency’s success hinges on execution, experts say.
The government introduced legislation to establish the long-awaited Financial Crimes Agency on April 27, after a 2021 Liberal campaign promise.
Historically, Canada has had low prosecution rates when it comes to financial crimes said Léon Moubayed, a partner in the investigations and white-collar defence and dispute-resolution practices at Davies Ward Phillips & Vineberg LLP.
“Canada has the laws, but did not have the level of enforcement that other countries have, and I think that the agency is meant to change this,” Mr. Moubayed said.
“This sends a message that Canada is getting really serious about financial crime,” he added.
Canada is currently awaiting the outcome of a review of its financial crime regime by the Financial Action Task Force, an intergovernmental body that sets standards to combat money laundering and terrorist financing.
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That review took place under new criteria that place more emphasis on the effectiveness of a country’s anti-money-laundering regime, rather than on technical compliance. The outcome of that review is expected this summer.
Ottawa has earmarked $352.7-million over five years to launch the new agency, starting in 2026-27, and $82.1-million annually after that, according to Tuesday’s spring economic update.
As part of the initiative, the federal government also promised $46.2-million over five years to the Public Prosecution Service of Canada, followed by $11.5-million a year, as well as $19.6-million over five years and $1.5-million annually to the Department of Finance Canada.
“I think it’s pretty exciting that we’re getting a [new] federal police force,“ said Jessica Davis, president of advisory firm Insight Threat Intelligence.
However, the initiative demonstrates that previous efforts to tackle financial crime, including by the RCMP’s Integrated Market Enforcement Teams, or IMETs, have fallen short, Ms. Davis said.
“The RCMP hasn’t been doing their job, so the government had to create an entirely new federal police agency to do it,” she said.
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Part of the reason why the RCMP’s efforts have failed is because the law enforcement agency is “structurally unable” to commit resources solely to financial crime investigations, Ms. Davis said. The new agency should solve that problem, she added.
Bill C-29, the act to establish the Financial Crimes Agency, also grants the Attorney-General of Canada the power to prosecute some financial crimes normally dealt with by individual provinces.
The Attorney-General would consider a number of factors, for instance whether the offence is transnational, occurred in more than one province or involves national security, according to Mr. Moubayed.
Ultimately, the new police agency’s success will depend on “the execution, not on the structure,” Mr. Moubayed said.
Salvator Cusimano, executive director of anti-corruption organization Transparency International Canada, said he’s encouraged by the agency’s budget and mandate.
“I think it’s important that this agency is able to look into some of the crimes that we know motivate serious and complex financial crimes, or that are connected to such crimes,” Mr. Cusimano said, citing bribery and corruption as examples.
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“It looks like the agency does have a mandate, or could have a mandate, to do that. But of course, you’d want to see what kinds of cases they start to prioritize when the rubber hits the road,” he added.
Ms. Davis said there are likely to be growing pains as the new agency gets established.
“I think they’ve got a big hill to climb in terms of working with the RCMP on files, because they’re going to have to transition a lot of files over from the RCMP and other police forces,” she said.
The spring economic statement also proposed banning cryptocurrency ATMs, also known as Bitcoin ATMs, calling them a “a primary method for scammers to defraud victims and for criminals to place their cash proceeds of crime.”
The ban follows similar actions in other countries. New Zealand has banned the machines, while Australia introduced strict daily transaction limits. Britain has effectively banned crypto ATMs by introducing a licensing regime that hasn’t issued any licences.
Ms. Davis praised the move, calling it a positive and important step.
“There’s no good use case for cryptocurrency ATMs,” she said.
“You’ll still be able to buy cryptocurrency in Canada. You’ll just have to do it through an exchange, or through an exchange-traded fund. It’s just going to cut down on one of these areas where people could buy cryptocurrency relatively anonymously, like even more anonymously than normal.”