Presentations and Speeches

Statement by Darlene Boileau, Deputy Director, Strategic Policy and Public Affairs
Financial Transactions and Reports Analysis Centre of Canada, before the Senate Banking, Trade and Commerce Committee

Ottawa, Ontario
February 9, 2012

Check against delivery

Good morning-Bonjour. Thank you Mr. Chairman. My name is Darlene Boileau. I am FINTRAC's Deputy Director of Strategic Policy and Public Affairs. It is our pleasure to appear before the Committee today. With me today are Barry MacKillop, Deputy Director of Financial Analysis and Disclosure; Chantal Jalbert, Assistant Director of Regional Operations and Compliance; and FINTRAC's General Legal Counsel, Paul Dubrule.

My opening remarks will outline FINTRAC's role in Canada's efforts to combat money laundering and terrorist financing. I will also describe how FINTRAC has evolved since this committee last reviewed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in 2006.

FINTRAC is Canada's financial intelligence unit, or FIU. We have a staff of 342, and we have three regional offices, Montreal, Toronto and Vancouver, in addition to our headquarters.

Our agency is unique in Canada; our mandate as defined under the Act is to receive and analyze financial transaction information and disclose this information to various levels of Canadian and foreign investigative bodies when certain legal thresholds are reached. This legislation governs FINTRAC's receipt, collection, analysis and secure handling of the information under its control. 

While the core of FINTRAC's work involves in-depth analysis of suspicious financial activity, FINTRAC is not a law enforcement agency. We do not investigate, we do not charge and we do not prosecute. Our job is to provide financial intelligence leads to police, law enforcement and national security and intelligence agencies. We are an important resource for every police department in Canada because of our unique ability to follow the criminal money trail across the country and around the world.

The Act requires that FINTRAC must disclose financial intelligence to our partners when we have reached the threshold of having reasonable grounds to suspect that the information to be disclosed would be relevant to investigating or prosecuting a money laundering or terrorist activity financing offence.

When and where statutory standards for disclosure are met, we communicate information to federal, provincial and municipal police forces; the Canada Revenue Agency; the Canada Border Services Agency; the Communications Security Establishment; and the Canadian Security Intelligence Service. We also disclose information to foreign financial intelligence units.

Our work begins with the daily intake of over 65,000 reports on several types of financial transactions from a variety of businesses, which we call reporting entities. Most of the reports we receive come from the banks; however, we also receive reports from casinos, credit unions, life insurance companies and money service businesses, to name but a few who are obligated by the Act to send reports to us.

We receive several categories of reports. We are authorized by law to receive suspicious transaction reports (or STRs), including attempted suspicious transactions, large cash transaction reports (or LCTRs) of $10,000 or more, casino disbursement reports, reports of international electronic funds transfers (or EFTs) of $10,000 or more and terrorist property reports.

When I say international, I should be clear that I mean electronic fund transfers entering or leaving the country. We are not authorized to receive reports of domestic electronic fund transfers.

The requirement of reporting entities to send us all these reports creates a strong measure at the front line of detection and deterrence of money laundering, and that is one of the key objectives of the Act.

The receipt of thousands of reports weekly by FINTRAC also means protection of privacy must always be foremost in our minds. In fact, our Act explicitly dictates that privacy considerations be intrinsic to our procedures for handling this information, including having a very robust set of security procedures.

Over the years, we have built a very large database of these different types of transaction reports. Through sophisticated technology and the skills of highly trained and experienced analysts, we can analyze this data from both a tactical and strategic perspective and understand it in combination with information from other sources, such as law enforcement and national security databases, commercially or publicly available databases and, sometimes, information from foreign financial intelligence units.

We make use of this information to produce both tactical and strategic financial intelligence. Tactical financial intelligence assists criminal and intelligence investigations. Its focus is the individuals, businesses, transactions and accounts that we suspect would be relevant to an investigation or prosecution of a money laundering offence, a terrorist activity financing offence or a threat to the security of Canada.

FINTRAC's core tactical intelligence product, the case disclosure, contains comprehensive details of the financial data we receive; these disclosures are communicated to our partners in law enforcement and the intelligence community to assist investigations.

As stated in our most recent annual report, we provided 777 case disclosures to assist investigations and eighty percent of these were generated following receipt of voluntary information from our partners.

The point of undertaking strategic financial intelligence is to gain a high-level, longer-term view, identifying emerging trends and patterns in methods used by criminal and terrorist organizations in money laundering and terrorist financing operations. This supports the government's national priorities such as the National Agenda to combat organized crime.

Strategic financial intelligence not only contributes to law enforcement and security agencies to directing their resources to manage different types of threats, but also influences the development of appropriate legislative and regulatory amendments, where warranted. In addition, it enables FINTRAC to refine its own tactical analysis tools and methods to better serve the needs of disclosure recipients.

That summarizes FINTRAC's role as a producer of intelligence for the benefit of other agencies and partners.

FINTRAC also has responsibility for ensuring compliance with Part 1 of the Act. We do this by working with the many businesses and individuals who have reporting, record keeping and client identification obligations set out in the Act. FINTRAC's compliance work ensures that the agency continues to receive the transaction reports necessary to produce financial intelligence.

As I noted earlier, our compliance efforts serve both the detection and deterrence aspects of our mandate. By improving record keeping and client identification requirements, we are creating an environment in Canada that is inhospitable to money laundering and terrorist financing. Banks, credit unions and other businesses have played a critical role in changing that environment.

The last parliamentary review of this legislation brought significant improvements to how FINTRAC operates. Specifically, it expanded the scope of what information we can receive and what information we can disclose to our domestic and international partners.

Prior to this change, FINTRAC was prohibited by law from informing its partners of the grounds reporting entities had for suspecting money laundering or terrorist financing. This seemingly small change has been of tremendous benefit to our work; we are now able to provide our partners with more precise information, which in turn aids their investigations.

FINTRAC has also made operational changes to improve the quality of our financial intelligence and turnaround times- improvements largely based on feedback from our clients. We have worked to align this output with the highest-priority cases of the RCMP and other police services in Canada. By assisting police with these cases, our intelligence has become much sought after– to the point that the Canadian Association of Chiefs of Police adopted a resolution at their last annual meeting acknowledging FINTRAC's significant contribution to organized crime investigations.

The resolution recognized that we are a key partner and that "financial advantage is the key goal for all criminal organizations and that consequently financial intelligence must be an integral component of all organized crime investigations."

More than ever, police are now voluntarily sharing information with FINTRAC concerning their priority investigations. They do so to gain a perspective on the proceeds of crime and the relationships within an investigation that can often only be made visible by following the money trail.

Significant regulatory improvements have also been made, improvements that were directly inspired by recommendations from this committee in 2006. The majority of the 16 recommendations made have been implemented.

As per the committee's suggestion, FINTRAC implemented a national registry of money services businesses (MSB). These entities are now legally required to register with FINTRAC. As well, we instituted an Administrative Monetary Penalty system to help ensure compliance with the law.

There are several other proposals for improvement that you will see reflected in the consultation paper released by Finance Canada.  I would call your attention to the proposals intended to improve information sharing in the regime and allow FINTRAC to better serve the police and other recipients of our financial intelligence. FINTRAC has worked closely with Finance Canada to propose changes that will bring the much needed improvements we identified through our operational experience of working within the existing legislative framework.

FINTRAC looks forward to the conclusions and recommendations of this committee's review of the Act, seeing as previous recommendations have resulted in significant improvements to how we fulfill our mandate, and hence our usefulness to police, law enforcement and national security agencies.

Over the past five years, FINTRAC's scope and reputation as an intelligence agency have grown considerably. Our success is measured by the quality of the intelligence we provide and the assistance we offer our partners. I am pleased to say that, by those measures, we are delivering a valued product, and demand for our product is growing. My colleagues and I would be happy to take any questions that you might have. Merci, thank you.