Opinion: Ottawa still gives financial criminals the treatment of children


Prime Minister Justin Trudeau seems to have a fleeting sense of urgency when it comes to tackling financial crime.

Of course, his government slapped those hooligan truckers by invoking the Emergencies Act to choke off funding for their so-called freedom convoy. But new proposals in the federal budget — ostensibly to bolster our anti-money laundering and anti-terrorist financing regime in the wake of these blockades — still offer brat treatment to sophisticated financial criminals.

There is something serious about the Canadian government treating clownish civilians as a greater threat to our national security than kleptocrats, money launderers, tax evaders and convicted terrorists.

If you expected Ottawa to provide a quick response to these proportionately greater risks – especially now that Russia’s invasion of Ukraine is the latest crisis to expose Canada’s vulnerability to dirty money – think again. -you. The federal budget marked a return to the characteristic Liberal progressiveness in the fight against serious financial crimes.

The government, for example, plans to crack down on money laundering in the housing market by subjecting all mortgage lenders to federal scrutiny within the next year. But imposing new rules on alternative lenders isn’t enough if Ottawa isn’t prepared to do the same for the lawyers who facilitate these real estate purchases — or other dodgy transactions in the economy, for that matter.

Canada is an international haven for financial crime and the only antidote is transparency

Lawyers have been exempt from reporting suspicious transactions to the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) since a 2015 Supreme Court of Canada ruling found that Ottawa’s previous requirements on them n did not comply with the Charter of Rights and Freedoms. This decision, however, left the door open for the government to revise its legislation, but it never did.

Now is the time to do so. The government’s own money laundering risk assessment indicates that lawyers, knowingly or unknowingly, can provide cover for criminals in the housing market. In fact, this issue was raised at the Cullen Commission of Inquiry into Money Laundering in British Columbia.

“Lawyers are the ‘black hole’ of real estate and the movement of money in general. Without law enforcement visibility into what goes in and out of a lawyer’s trust account, many investigations are stalled,” reads a report commissioned by the government of British Columbia and written by Peter German, lawyer and former Deputy Commissioner of the RCMP.

Of course, dirty money also taints other parts of our economy. But instead of immediately embarking on a complete overhaul of our anti-money laundering and anti-terrorist financing rules, the Liberals are pursuing more piecemeal measures and re-announcing old news.

For example, we didn’t need the budget to tell us that Ottawa plans to permanently require crowdfunding platforms and other payment service providers to report suspicious transactions to FINTRAC. Finance Minister Chrystia Freeland made this known during the trucker blockades.

The government is also considering other changes to strengthen the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the Criminal Code and other laws, but has no specific timeline for doing so.

In addition, it provides for another comprehensive review of our anti-money laundering and anti-terrorist financing regime.

Oh damn it! No more analysis paralysis on an issue that has already been studied to death.

Why not dust off the many reports already written on this issue over the years, notably by the Financial Action Task Force and the Standing Committee on Finance?

Now is the time to act, no dithering. Start by empowering FinTRAC to ask follow-up questions about suspicious transaction reports filed by banks and other companies.

Next, give banks a permanent “safe harbour” — a provision that shields them from legal liability if they participate in data-sharing partnerships to catch criminals. It’s ridiculous that this type of information sharing is still not allowed, especially since the Trudeau government was quick to grant banks temporary legal indemnity to share customer information during trucker lockdowns.

And stop throwing relatively small amounts of money at a giant problem. Specifically, the budget indicates that Ottawa will provide FINTRAC with $89.9 million over five years, and $8.8 million annually on an ongoing basis, to support its work. It also allocates $2 million to Public Safety Canada to establish a new Canadian Financial Crimes Agency.

These amounts are paltry given that an estimated $45 billion to $113 billion is laundered here each year, according to a 2020 report by Criminal Intelligence Service Canada.

Even the one thing the Liberals seemed to be doing well risks becoming a half measure.

Ottawa has shortened its deadline to create a publicly available corporate beneficial ownership registry, a tool to unmask the crooks behind anonymous shell companies. This database, which will store details of who ultimately owns and controls millions of private companies, is now expected to be accessible before the end of 2023, rather than 2025.

But don’t get too excited; there is a catch. The registry will only cover corporations incorporated federally under the Canada Business Corporations Act. This means that companies incorporated in the provinces and territories will not be immediately included in the federal database.

Equally troubling, the budget’s fine print suggests provinces and territories won’t be forced to join the national registry. What good is it if their participation is not compulsory?

Also, how does Ottawa expect to fulfill a related promise to create a national land registry?

The Basel Institute on Governance, an independent non-profit organization that fights corruption and financial crime, recently denounced Canada for its “ineffective beneficial ownership transparency measures”. The institute’s 2021 report, which assesses countries’ money laundering risk levels, ranked Canada 77th out of 110 countries, with a score of 4.67 out of 10.

This is great news for financial criminals and even Russian oligarchs evading sanctions, as Canada has no way of monitoring the creation of shell companies in real time.

Ottawa must act quickly to permanently expand the scope of Canada’s anti-money laundering and anti-terrorist financing rules.

Mr. Trudeau has already proven that his government can move with breakneck speed to stifle dissent from a group of misguided truckers. So Ottawa certainly shouldn’t waste time stopping seasoned financial criminals in their tracks.

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