The Table of Contents for the RCMP Feature Focus: 2005 Economic Crime is available in html format at: toc_e.htm |
Money laundering: a sophisticated crime
Activity integrated in Canada’s economy
- IMF estimates 2-5% of a country’s GDP laundered money ($20-50B in Canada)
- FINTRAC – created through Proceeds of Crime Act in 2000
- 197 suspicious transactions ($700M) case disclosures to law enforcement in 2003-’04 (doubled from 2002-’03)
- reporting entities included financial institutions such as banks, casinos and securities dealers
Primary involvement by:
- organized crime – motorcycle and Asian-based
- 75% + of cases from drug trafficking
- increasingly infiltrating legitimate industries – construction, real estate, transportation and hospitality
- individual tax evasion
- corporations concealing fraud to protect confidence in brand
Technologically facilitated
- requires knowledge of financial systems and complex ways to hide sources of funds using advanced communications systems
- Internet – growth in use of electronic transfers and online casinos
- money services business – e.g., currency exchange houses – emergence of underground banking system
- shell companies – used to wire money to other countries – transnational nature of transactions complicates domestic investigations
- private ATMs – found in restaurants, bars, convenience stores – some owned by criminal organizations
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Proceeds of Crime Act - financial entities must report:
- transactions – reasonable grounds to suspect money laundering or terrorist financing offence
- large cash transactions or electronic fund transfer of $10,000 or more
- terrorist financial assets
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Money laundering…
Multi-dimensional impacts
Undermines Canada’s legitimate economy
- weakens competition – criminals willing to lower profit margins in order to facilitate laundering
- undermines confidence of domestic and foreign investors
- loss of tax revenue for governments and unfair tax distribution
Enables criminal groups to self-fund, engage in research and development and underwrite new and more sophisticated types of activity
Future management strategies may include:
- strengthened legislation – harsher penalties and forfeiture of assets
- bolstered prosecution tools – facilitate evidence gathering and seizure
- improved reporting – include lawyers under the law and expand coverage of money services business
- educate legislators on evolution of crime and associated legislative and investigative requirements
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Proposed reverse onus bill debated
- convicted criminals would need to demonstrate assets were not obtained using proceeds from their criminal activities
- would improve asset forfeiture and diminish profitability of organized crime activity
- would be consistent with FATF recommendations
- may face Charter of Rights and Freedoms challenge
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Project Encumbrance – Vancouver BC
- undercover operation conducted from May 2003 – March 2004 with Vancouver Integrated Border Enforcement Team – included Vancouver City Police, Richmond and Surrey detachments of the RCMP
- US funds came from the proceeds of BC-grown marijuana – exported and sold to the US – funds were smuggled back to Canada to be exchanged for Canadian dollars
- seized: 81 lbs of marijuana, four semi-automatic hand guns, $2M CDN, $1.5M US in cash and various assets
- pending charges against eight individuals
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