Presentations and Speeches

FINTRAC Presentation to the Senate Banking, Trade and Commerce Committee - Year Five Legislative Review

Ottawa
May 18, 2006

Table of Contents

• Introduction
• Who We Are
• What We Do - Detection
• What We Do - Deterrence
• Looking Ahead
• Conclusion

• Thank you, Mr. Chair.
   
• I am very pleased to appear before this Committee to speak to you about FINTRAC and the work that we are doing. My name is Sandra Wing and I am the Senior Deputy Director, Operations, at FINTRAC.
   
• Today, I am joined by my colleague Yvon Carriere, Senior Counsel, Legal Services.
   

• I understand that the Department of Finance appeared before you yesterday and provided members with an overview of Canada’s anti-money laundering/anti-terrorist financing regime.
   
• Today I will focus on FINTRAC - who we are, what we do, and some of the challenges and opportunities.
   

• FINTRAC’s mandate is to assist in the detection and deterrence of money laundering and terrorist activity financing in Canada and around the world.
   
• FINTRAC is but one of many key partners in Canada’s broad anti-money laundering/anti-terrorist financing regime. In addition to our federal partners, there are many provincial, municipal and private industry partners who all play a critical role.
   
• We are Canada’s financial intelligence unit. We receive and analyze financial transaction and other information, and provide financial intelligence to law enforcement and investigative agencies, and foreign financial intelligence units.
   
• We operate at "arm’s length" from those agencies to which we disclose financial intelligence.
   
• This independence ensures balance between the need to safeguard the privacy of personal financial information and the investigative needs of law enforcement and security agencies.
   

• Our legislation places obligations on:
   
  • Deposit taking institutions;
     
  • Accountants;
     
  • Casinos;
     
  • Money services businesses and Foreign exchange dealers;
     
  • Securities dealers;
     
  • Life insurance companies and
     
  • Real estate brokers and agents.
     

• These entities must report to FINTRAC:
   
  • Suspicious transactions, regardless of their dollar value;
     
  • Cash deposits of $10,000 or more;
     
  • Wire transfers into or out of Canada of $10,000 or more; and
     
  • Terrorist property holdings.
     

• In addition, anyone crossing the border must report to the Canada Border Services Agency movements of cash or monetary instruments of $10,000 or more into or out of Canada. All such reports are sent to FINTRAC by the CBSA. FINTRAC also receives from them, reports of any currency seizures.
   

Analysing Information

• FINTRAC receives about one million financial transaction reports per month. More than 99% of our reports are received electronically.
   
• FINTRAC’s analysis of these transactions can be initiated in a variety of ways, but whatever the starting point, analysts search through the Centre’s database, using specially designed technological tools, to uncover patterns of suspect financial transactions.
   

Disclosing Financial Intelligence

• When, as a result of its analysis, FINTRAC has reasonable grounds to suspect that the information would be relevant to the investigation or prosecution of a money laundering or terrorist activity financing offence, the Centre must make a disclosure to the appropriate police force.
   
• In cases where there are reasonable grounds to suspect a threat to the security of Canada, including terrorist activity financing, FINTRAC must disclose to the Canadian Security Intelligence Service.
   
• In some cases, we must also disclose to the Canada Revenue Agency and the Canada Border Services Agency. However, in these instances, we must meet a dual test.
   
• FINTRAC has also entered into information sharing agreements with 30 foreign financial intelligence units.
   

Additional Information: MOU partners

• Argentina, Aruba, Australia, Bahamas, Belgium, Barbados, Bulgaria, Cayman Islands, Colombia, Cyprus, Denmark, El Salvador, Finland, France, Guernsey, Italy, Israel, Latvia, Mexico, Monaco, Netherlands, Panama, Portugal, Singapore, Slovenia, South Korea, Spain, Ukraine, United Kingdom, United States.
   

• The information contained in our financial intelligence disclosures includes details about the financial transactions, when and where they took place, the individuals conducting the transactions, and any accounts, businesses or other entities involved.
   

Results

• Let me speak briefly about our results in relation to detection.
   
• As of March 31, 2005, FINTRAC had made more than 442 case disclosures to enforcement and security agencies, identifying thousands of individuals and businesses and tens of thousands of suspect financial transactions.
   
• The total dollar value of the financial transactions disclosed was $3.2 billion.
   
• While results for the last fiscal year are still being gathered and verified, I can tell you that the number of case disclosures are up, and the total dollar value of the transactions disclosed has increased significantly.
   

• I will turn now to FINTRAC ‘s compliance function.
   
• We are mandated to ensure that reporting entities comply with their client identification, record keeping and transaction reporting requirements.
   
• In order to meet this task, we have established a modern and comprehensive compliance program.
   

Results

• FINTRAC has been very active in promoting awareness among reporting entities. We made close to 600 presentations last year with reporting entities and associations, reaching close to 15,000 individuals.
   
• We have conducted close to 400 compliance examinations to date.
   
• I am pleased to say that the vast majority of reporting entities examined demonstrate a willingness to comply with their obligations and to take action when deficiencies are brought to their attention by FINTRAC.
   
• Only a small number (5) have been referred to law enforcement for investigation and prosecution.
   
• In order to minimize the regulatory burden on our reporting entities, FINTRAC has established partnerships with 15 regulators, including OSFI.
   

• FINTRAC’s positive results are shared successes. It is the combined efforts of financial institutions and intermediaries, regulators, law enforcement, CSIS, and other domestic partners that is making it increasingly more difficult to launder money in Canada than it was prior to 2000.
   
• While we have achieved many things over the last 5 years, there is still room for improvement. I believe the Department of Finance addressed this yesterday.
   
• I will highlight a few proposed changes of particular importance to FINTRAC:
   
  1. Enhancing the requirements for customer due diligence;
      
  2. Expanding the list of designated information contained in FINTRAC’s financial intelligence disclosures;
      
  3. Allowing the use of administrative monetary penalties to encourage compliance;
      
  4. Requiring the registration of money service businesses; and
      
  5. Covering real estate developers and dealers in diamonds and precious metals.
      
      
• The Consultation Paper released by Finance last year addresses a number of current money laundering and terrorist financing issues, but it will not end there. The methods used to conceal and move illicit funds will evolve, financial services themselves will evolve and we will need to keep pace.
   
• We must be vigilant in exploring emerging issues that will demand new solutions. Some issues on the horizon that we are following closely include: the use of White Label ATMs, internet banking and e-money.
   
• There are concerns that criminals are making international electronic funds transfers below the current thresholds that trigger a transaction report to FINTRAC. We also need to assess the degree to which domestic electronic funds transfers are figuring into money laundering and terrorist financing schemes.
   
• Many issues will require further elaboration to ensure that any new measures to address them are effective and feasible.
   
• The current legislative and regulatory proposals provide Canada with a measured approach that can be reasonably achieved over the next few years.
   

Conclusion

• I will conclude my presentation here. I hope that you have found it to be useful.
   
• I would be happy to answer any questions that you may have.