27 Jul 2021
Over the past 10 years, Ottawa-area banks flagged more than 10,000 suspicious transactions to Canada’s financial intelligence agency, but during that same period only 20 people faced money laundering-related charges in the city.
The disparity between those numbers reflects the challenges of cracking down on money laundering and the flow of illegal funds in Canada, experts say.
The data, which is publicly available, shows that, beginning in 2011, banks in the Ottawa area were signalling several dozen reports of suspicious activity to the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, every month. But those numbers have risen recently, beginning to number in the hundreds each month in 2019 and 2020.
Suspicious transaction reports are, according to FINTRAC, financial transactions for which there are reasonable grounds to believe they may be linked to money laundering or terrorist financing. A spike in their number is not necessarily indicative of a rise in the amount of money laundering taking place; FINTRAC said in a statement to this newspaper that such reports are on the rise across Canada because the agency has been pushing to have businesses recognize the signs of suspicious transactions and report them.
But experts say that it’s not always obvious whether there is a follow-up to these reports and that money laundering has long been left by the wayside in Canada. It is under-prosecuted and under-policed, in part, they say, because law enforcement and prosecutors face a number of hurdles that often prevent them from following through with money laundering investigations.
“No one knew whether (suspicious transaction reports) were being followed up on,” said James Cohen, the executive director of Transparency International Canada. “Especially on money laundering, it can be a difficult crime to investigate because of the data that’s required. It skips through jurisdictions, it can be covered up, and, from what I’ve heard quite often anecdotally, is that it often doesn’t lead to career advancement within law enforcement, so it’s often easier or more desirable to go after the predicate crime.”
In fact, Canada is such an appealing money laundering destination that there is a coined term to refer to illegal money laundered here: snow-washing.
“You have nearly no prosecutions in the country,” said Matt McGuire, the co-founder and practice director of The AML Shop. “The odds are infinitely small that you are going to be charged. If you are charged, the odds are infinitely small that you are going to be prosecuted. If you are prosecuted, it’s almost entirely unlikely that they’re going to find the money and almost entirely unlikely that it’s going to be forfeited.
“None of the objectives of the system are accomplished in that way, except for perhaps deterrence, the fact that there’s hostility in the system towards money laundering.”
By Matthew Lapierre, Ottawa Citizen, 26 July 2021
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