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October 11, 2006

Address by the Honourable Jim Flaherty, Minister of Finance, at the opening of the First Plenary Meeting of the 18th Session of the Financial Action Task Force

Vancouver, British Columbia

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Thank you very much, and welcome to Vancouver and to the First Plenary Meeting of the 18th Session of the Financial Action Task Force.

It gives me great pleasure to open this event under Canadian chairmanship, and to offer a special welcome to the members of the delegation from the Republic of Korea, who are attending their first FATF meeting as observers.

I’m sure you’re enjoying this vibrant host city as much as I do when I come here. Canadians are excited and proud that Vancouver is busy preparing to host the 2010 Winter Olympics.

This city’s diverse population, bustling trade, natural beauty and dynamic cultural communities really do represent what Canada is all about.

Canada is about diversity. About freedom. About quiet pride, and innovative spirit. Ours is a country comprised of many cultures, all of which contribute to our unique and strong Canadian identity.

We know that we are fortunate to live in a country where we are free to be who we are, to raise our families as we see fit, to earn a living, to speak openly without fear of censure, to practise our religious faith without persecution, and to follow our dreams.

Canada is also a country on the move, a country with a G7-leading economy and, under our new government led by Prime Minister Harper, a steadfast commitment to meeting its international obligations.

We take our global responsibilities very seriously.

More than 2,000 members of the Canadian Forces are in Afghanistan today at the request of the Afghan government. Most are part of the NATO-led International Stabilization Assistance Force.

Canadians are there to do our part to prevent Afghanistan from once again becoming a failed state that provides a safe haven for terrorists and terrorist organizations.

We are there to provide the people of Afghanistan with hope for the future.

We are there to help the government and its people build a stable, peaceful and self-sustaining democratic country.

Ladies and gentlemen, we all know one basic fact. 

Terrorists need money.

That’s why we’re here today.

To make it harder for them to get it.

To work together to find ways to starve them of the funds they need to finance their despicable ambitions.

The fight against money laundering and terrorist financing is one that we must win. We must stay one step ahead of criminals by continuing to develop ways to defeat them, wherever they operate.

We live in an increasingly connected world, where terrorists and criminal organizations are becoming more sophisticated in their attempts to move, conceal and launder funds through financial systems and other means.

Ironically, our ongoing efforts to maintain the stability and dependability of our financial systems can pose risks because, like everyone else, criminals prefer financial systems they can trust.

Abuses to one nation’s financial system can have a serious ripple effect well beyond its borders.

This makes your work more challenging than ever.

It also makes it more important than ever.

The FATF has made great strides over the years in working with regional bodies and international financial institutions to develop a more fortified international system.

You are to be commended for this, and for continually highlighting best practices around the world and incorporating them into new, better international standards.

Our success depends on all of our individual efforts. When we combine those efforts, as we are doing today, we become a more formidable foe to criminals and terrorists who want to use our financial systems to fund criminal activities.

I can assure you that Canada’s New Government is being relentless in its efforts to combat money laundering and terrorism financing.

We are committed to playing a stronger role at home and internationally and have already been doing so through a number of initiatives, which I will touch upon briefly now and talk more about in a few minutes.

2. We are increasing our involvement in regional bodies like the Asia/Pacific Group, which are fighting money laundering and terrorist financing within their own borders;

3. The City of Toronto has been chosen to become the permanent home for Egmont, and Canada will contribute $5 million over the next five years to help Egmont’s permanent secretariat get established; and

4. Last Thursday, our government introduced tough new anti-money laundering and terrorist financing legislation, which I will talk more about in a few minutes.

Increased Funding in Budget 2006

Since taking office in February, Canada’s New Government has made the safety and security of our citizens—and our fellow citizens around the world—a priority.

In our first budget in May, our government announced significant new funding to enhance the work being done by:

• Canada’s financial intelligence unit, the Financial Transactions and Reports Analysis Centre of Canada;

• the Royal Canadian Mounted Police;

• the Canada Border Services Agency; and

• the Department of Justice.

This additional funding will help in a number of ways:

• it will increase the number of RCMP officers working within the anti-terrorist financing and anti-money laundering units;

• it will expand the capability of the Canada Border Services Agency to detect unreported currency at airports and border crossings;

• it will enable the Department of Justice to handle the expanding legal workload that will result from increasing the enforcement resources of other government departments; and

• it will ensure FINTRAC, Canada’s financial intelligence unit, can better analyze financial transaction reports and monitor the compliance of the unregulated financial sectors such as money remitters.

A Stronger International Role for Canada

FINTRAC

FINTRAC is widely considered to have leading-edge analytical and technological capacity. Since FINTRAC began making disclosures in early 2002, it has provided law enforcement and intelligence agencies with key financial intelligence on money laundering, the financing of terrorist activity and threats to Canada’s security by analyzing financial transaction reports and other sources of information.

In fact, last week FINTRAC released its annual report and revealed that it had tipped law enforcement and the Canadian Security Intelligence Service to more than $5 billion in suspicious deals last year—more than double the figure than the year before.

FINTRAC ensures that reporting entities are aware of and comply with money laundering and terrorist financing legislation and regulations. They do this while vigorously protecting the security of the personal information under their control.

While only in existence for a few years, FINTRAC’s work is paying off.

International Role

Canada is proud to work with a number of regional bodies that share the same objectives as we do—cutting off the funds terrorists need. We are working with groups such as the Asia/Pacific Group on Money Laundering and the Caribbean Financial Action Task Force.

Our commitment to these regions is why our government announced funding for technical assistance and training in the fight against money laundering and terrorist financing.

Among other projects, this funding will be used to help the Eastern Caribbean Central Bank improve its money laundering and terrorist financing system, and to provide on-the-ground training to improve the effectiveness of regulation throughout the Caribbean and Asia/Pacific regions.

Canada will also contribute resources towards the work of the Asia/Pacific Group in the delivery of technical assistance and training within that region.

FATF Presidency

Holding the FATF Presidency is another example of Canada’s commitment to national and international security, collaborative solutions to global threats, and the need for international cooperation and institutions.

During the June FATF plenary meeting, Canada presented its draft work plan for our Presidency year.

The plan builds on the FATF’s ongoing commitments, including regular member assessments and improving international cooperation. It also focuses on a few key priorities: actively pursuing the accession to membership by China, India and the Republic of Korea; enhancing dialogue with the private sector; and a review of the strategic direction of the organization in preparation for its mid-term review.

In particular, it emphasizes the importance of strong collaboration with the Financial Action Task Force-style regional bodies.

Egmont

This July, I was proud to announce that Toronto has been selected as the permanent home for the Egmont Group secretariat. It is particularly fitting that Egmont’s permanent home will be located in the heart of Canada’s financial community.

Canada will provide funding over five years to provide the group with the stable foundation it needs to strengthen its operations and infrastructure, so that it can continue its important work well into the future.

Legislation

Another example of our government’s commitment to treating this issue seriously is legislation we tabled just last week. When it is passed, which I expect will happen before the end of this year, this bill, which contains amendments to Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act, will significantly strengthen Canada’s laws on money laundering and terror financing.

Once passed by Parliament, these changes will make Canada’s overall regime consistent with international standards.

It will do this by, among other things:

2. Bringing money service businesses which wire money or issue travellers cheques into FINTRAC’s reach;

3. Strengthening "know your customer" measures for financial institutions;

4. Requiring banks, insurance companies, securities dealers and money service businesses to identify and monitor the transactions of foreign nationals and their immediate families who hold prominent public positions;

5. Requiring the reporting of attempted suspicious transactions.

Our government is also working to bring lawyers into Canada’s regime, and is in the process of creating an advisory committee involving both the public and private sectors to help with various money laundering and terrorist financing issues.

All of us face numerous challenges as we create legislation that firmly adheres to FATF standards—some unique to each country’s legal system, and some we all share.

One of the issues we take very seriously here in Canada is the need to balance increased vigilance and monitoring with the fundamental need to protect the privacy of Canadian citizens.

As we did with this legislation, we will continue to consult widely with Canadians in the future to ensure a better system does not come at the price of a loss of privacy for our citizens.

Through the additional funding provided in our spring budget, legislative reforms and initiatives I have outlined this morning, Canada’s New Government is going much farther to detect, deter and prevent the abuse of our financial systems by terrorists and organized crime.

Conclusion

All of these steps, and all of our efforts, add up to a better, safer world for all of us. A world where our financial systems are used as they were intended: to create better opportunities for our citizens and greater prosperity for our nations.

We will ultimately win the battle against terrorist and criminal activity by being smarter, more resourceful and more tenacious.

We will work together to continue to find new ways to starve these groups of the funds they need to execute their plans.

Criminals don’t stand still—and neither can we. As we adapt, they adapt. So we must be vigilant and relentless in our pursuit of ideas, innovations and ways to cut them off and make it harder for them to finance their activities.

Your efforts this week will go a long way towards permanently gaining the upper hand in this fight.

I wish you much success.

Through more funds, improved legislation and a relentless resolve to shoulder our global responsibilities, Canada is serving notice that we will put these criminals out of business every chance we get.

And I assure you that, in Canada, you have an ally that will do everything possible to make our shared goal of a safer world a reality.

Thank you.