Countries/Jurisdictions of Primary Concern - Canada
Money laundering activities in Canada are primarily a product of illegal drug trafficking, financial crimes, and fraud, notably capital markets fraud, commercial (trade) fraud, payment card fraud, and mass marketing fraud. The criminal proceeds laundered in Canada derive predominantly from domestic activity controlled by drug trafficking organizations and organized crime. Foreign-generated proceeds of crime also are laundered in Canada.
The money laundering methods used in Canada have remained relatively consistent in recent years. They include smuggling, money service businesses and currency exchanges; casinos; the purchase of real estate; wire transfers; establishment of offshore corporations; use of credit cards, stored value cards, digital currency, and new payment methods; use of nominees; use of foreign bank accounts; and the use of professional services such as lawyers and accountants. The use of professional services is a key money laundering threat.
Canada does not have a significant black market for illicit goods. Cigarettes and counterfeit goods and software are the most commonly smuggled goods in the country. There are indications that trade-based money laundering occurs, and underground financial systems are used within the immigrant community. Some human trafficking organizations engage in money laundering. Bulk cash smuggling is widespread.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: No
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO
KYC covered entities: Banks and credit unions; life insurance companies, brokers, and agents; securities dealers; casinos; real estate brokers and agents; agents of the Crown (certain government agencies); money services businesses (MSBs); accountants and accounting firms; lawyers; dealers in precious metals and stones; and notaries in Quebec and British Columbia
Number of STRs received and time frame: 92,531: April 1, 2014 - March 31, 2015
Number of CTRs received and time frame: 8,445,431: April 1, 2014 - March 31, 2015
STR covered entities: Banks and credit unions; life insurance companies, brokers, and agents; securities dealers; casinos; real estate brokers and agents; agents of the Crown; MSBs; accountants and accounting firms; dealers in precious metals and stones; and notaries in British Columbia and Quebec
money laundering criminal Prosecutions/convictions:
Prosecutions: 228: 2013-14
Convictions: 40: 2013-14
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Canada is a member of the FATF and the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/countries/#Canada
Enforcement and implementation issues and comments:
In July 2015, Canada published its national inherent risk assessment on ML/TF. The purpose of this report is to better identify, assess, and understand inherent money laundering and terrorist financing risks in Canada.
On July 4, 2015, the Government of Canada pre-published for public consultation amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations to strengthen its AML/CFT regime and improve its compliance with international standards. The proposed regulations introduce a number of regulatory amendments that are needed to enact some legislative amendments made in June 2014, as well as other standalone regulatory measures. The package of amendments would: expand the concept of politically exposed persons (PEPs) to include domestic PEPs and heads of international organizations; clarify the type of customer information reporting entities must obtain and keep as part of the customer due diligence process; clarify obligations to assess and document the risks associated with new technologies used by reporting entities; and expand the designated information that the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada’s financial intelligence unit, can disclose. Final publication for these amendments, scheduled for mid-2016, is required before the PEP provisions come into force. A new Security of Canada Information Sharing Act was adopted in 2015 to facilitate the sharing of information between Canadian government agencies with regards to any activity that undermines the security of Canada, including terrorism.
Canada has a rigorous detection and monitoring process in place to identify money laundering and terrorism financing activities, but additional enhancements to its enforcement and conviction capability would be beneficial. FINTRAC made 1,260 disclosures to law enforcement and other government agencies from April 1, 2014 to March 31, 2015. Of these, 923 disclosures were money laundering related, 228 were terrorism financing or security threat related, and 109 were both money laundering and terrorism financing or security related.
Obstacles to successful enforcement include privacy rules that prevent FINTRAC from freely sharing information with law enforcement; complex investigations that can take understaffed police agencies years to finish; and overworked Crown Prosecutors. Though the legislative framework does not allow law enforcement agencies direct access to FINTRAC’s databases, FINTRAC may disclose actionable financial intelligence to assist money laundering, terrorist financing, and security threat investigations.
Canada should continue its work to strengthen its AML/CFT regime and ensure its privacy laws do not excessively prohibit providing information to domestic and foreign law enforcement that might lead to prosecutions and convictions. The government should further enhance its enforcement and conviction capability.