Proposed federal agency could be powerful tool against financial crime

On August 24, 2021, the federal Liberal party released a housing plan as part of its election campaign with 17 promises they say will be implemented if re-elected. To the surprise of just about everyone, buried at the very end, as if of no importance, was a promise to create a federal financial crime agency to investigate and combat major financial crimes, including money laundering in real estate.

The idea of a federal agency for major financial crimes in Canada has been bounced around for a while. In 2014, the casino sector in Canada drafted a proposal for a federal financial crime centre, with the support of a law enforcement agency and casino government regulator, and the proposal was submitted to the federal government.

At that time, the casino sector was keen to expand learning and excel in anti-money laundering compliance. The proposed financial crime centre, therefore, was to serve as a place where global best practices would be drafted and shared, and all reporting sectors, including casinos and realtors, would be required to receive training by the centre to help make Canada a place where financial crime was not welcome.

The financial crime centre had support from the federal minister of finance but, I was told by the minister’s staff, the then prime minister of Canada was of the view that tax-payers should not pay any of its costs, and so the proposal was shelved.

In 2018, our federal parliamentarians undertook a statutory review of the effectiveness of Canada’s anti-money laundering legislation. They traveled to meet with international experts in other countries to identify Canada’s gaps in financial crime and learn from the successes of other countries. Both Conservative Party Leader Erin O’Toole and B.C. MP Dan Albas were active participants in that review. An all-party consensus report then recommended a permanent federal joint task force for law enforcement to combat money laundering and build resilience for financial crime investigations and prosecutions – in essence a financial crime agency – same as the new Liberal party election promise.

So, we’ve been here before. And although nothing happened to implement improvements to Canada’s financial crime picture, what is different now is that every federal political party is on the same page as Canadians in our desire to curb the epidemic of money laundering plaguing the country with a new federal body mandated to excel in investigations and prosecutions, and there is an opportunity to capitalize on the political will of Canada’s political leaders and make it happen.

To succeed, the new agency will need to be sufficiently financed and staffed to enable it to do its job. It will need to be located in a key city with significant financial crime activity, which suggests it has to be situated in Vancouver, Toronto or Montreal. It will need to be led by experts from law enforcement. The federal legislation enacted for its creation will need to give it such legislative powers as are necessary to allow it to function, untrammeled, on its journey to become the premier agency to combat financial crime. And finally, if we want to combat financial crime in Canada, it needs to have actionable intelligence along the lines that FinCEN provides to law enforcement in the U.S., with artificial intelligence and network analysis capabilities to stay ahead of the criminal curve.

With those key ingredients, a new federal financial crime agency could, in short order, combat significant financial criminal activities in Vancouver tied to the most material predicate offences that impact Vancouver such as narcotics trafficking, illegal gambling, illegal money services business activities, securities fraud and capital markets manipulation.

It could also combat terrorist financing threats from Iran, and now Afghanistan, and from Bitcoin tumbling services in our own backyard that anonymize criminal transactions as a service. It could also combat foreign dirty money from the proceeds of corruption flowing into real estate from politically exposed persons.

The real value, though, is in the downstream benefits to Vancouver, and Canada as a whole. If we have a new federal financial crime agency and it starts to yield effective, measurable and tangible results that Canadians can see, it can serve to deter future criminal conduct and save lives by reducing fentanyl imports; it can reduce investments into market manipulative companies in our capital markets and divert such investments into real startups to grow our innovation economy; and it can make our country a safer place to live and invest in.

Christine Duhaime is a financial crime expert with Fusion Intelligence.