Presentations and Speeches

Remarks by Interim Director Barry MacKillop
Financial Transactions and Reports Analysis Centre of Canada
at the US Parliamentary Intelligence-Security Forum

Washington, DC
December 7, 2017

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Good afternoon everyone. I would like to begin by thanking Congressman Robert Pittenger for inviting me here today to speak on financial intelligence and the role it plays in disrupting terrorism financing activities in Canada and abroad.

As Canada's financial intelligence unit, FINTRAC's mandate is to assist in the detection, deterrence and prevention of money laundering and terrorist activity financing. The Centre's intelligence and compliance functions are a unique contribution to the safety of Canadians and to the protection of Canada's financial system.

The Centre operates under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act—also referred to as the PCMLTFA. Under this legislation, FINTRAC, police, law enforcement, intelligence and national security agencies, prosecutors and various types of businesses across the country play an integral part in detecting and deterring money laundering and terrorist activity financing.

FINTRAC is an administrative financial intelligence unit with no investigative or seizure powers. The Centre acts at arm's length from government, police services, law enforcement agencies and other entities to which it is authorized to disclose financial intelligence.

Whether it is money laundering or terrorism financing, these heinous crimes know no borders. This is why international cooperation is essential to address the risk and to identify ways to detect and prevent these activities that threaten the safety and security of our people.

Past View and Current Assessment

When we look at the global terrorism environment, it is clear that this threat is very real and is not going away. Over time, terrorist groups may lose territory and fighters, but the ideology and its financial support remain. We've seen attacks occur in all corners of the world: Europe, Africa, North America. This is the reality we face today: a threat we cannot ignore and one that can only be addressed through collaboration.

So how does financial intelligence fit within this reality?

We know that terrorism financing and high-risk traveller cases, in particular, most often entail relatively small amounts of money. We know terrorism funding is obtained from illegitimate sources as well as from legitimate ones. We know that money is moving through the formal financial system or financial hubs, money services businesses or informal value-transfer systems such as Hawalas and Hundis, donations to charities, cash couriers, and in some instances, personal funding.

We know this from the financial transaction reports we receive from businesses subject to the Act across Canada such as suspicious transaction reports and electronic funds transfers, which provide a unique perspective on international financial transactions.

We also know that new emerging tools are being utilized to raise funds and finance these violent crimes, such as crowdfunding and anonymous online donations.

What are we doing to address this threat?

As a financial intelligence unit, we have developed unique relationships not only with businesses who report certain types of transactions to us, but also with our police, law enforcement and national security partners.

Our operations are based on a ‘Compliance for Intelligence and Intelligence for Enforcement' concept which recognizes that the production of financial intelligence is a continuum. It begins with businesses submitting quality and timely financial transaction reports to FINTRAC, which in return, provides actionable financial intelligence to Canada's police, law enforcement and national security partners. A clear result of these efforts was the significant increase in volume and quality that we saw in suspicious transaction reporting, which is critical to our intelligence efforts. This concept further allows us to collaborate with Canada's Security and Intelligence Community to help identify and mitigate terrorism threats.

The compliance efforts of Canadian businesses and, in particular, the financial transaction reports they provide to FINTRAC are the foundation of our analysis and the intelligence that we are able to provide to Canada's police and national security agencies. Reporting entities are the first line of defence in Canada's anti-money laundering and anti-terrorist financing regime and we've seen a positive change when it comes to compliance within their business. They are engaged in this fight because it's the right thing to do, not because it's the law. We have seen the impressive results that the regime can achieve when we work collectively and collaboratively against those who seek to abuse our financial system or threaten Canadians.

Immediately after the October 2014 terrorist attacks in Canada, we reminded our reporting entities of their role in providing suspicious transaction reports with the goal of providing any assistance we could to our police and national security partners. This engagement resulted in an increase of 22 percent in suspicious transaction reporting from businesses across Canada and had an important impact our intelligence efforts.

We've also seen great results with Project Protect, a unique public-private initiative that mobilized partners across the country to combat human trafficking in the sex trade. Canadian financial institutions committed to making the tracking of money laundering associated with this activity a priority of their compliance programs. This collaboration led to the publication of our first Operational Alert, which focused on the types of financial transactions, financial patterns and account activities that may raise suspicions of money laundering and trigger the requirement to send a suspicious transaction report to FINTRAC. As a result of these efforts, the Centre received approximately 4,000 suspicious transaction reports which led to the production of over 200 financial intelligence disclosures.

Results like these are ensuring that our people and our communities are safe. It would be great to develop this type of partnership to assist us all in combatting global threats such as terrorism financing.

From an international perspective, we also work with foreign financial units to protect Canadians and Canada's financial system to address the transnational nature of terrorism financing in a collective way. Through bilateral agreements, we are able to disclose financial intelligence to 101 financial intelligence units worldwide when the appropriate threshold is met. At the same time, foreign intelligence units are able to share their information with FINTRAC, which broadens our analyses of international financial transactions. Last year, the Centre sent 318 disclosures of financial intelligence to its foreign counterparts in relation to money laundering and terrorism financing.

Our relationships with foreign financial intelligence units go beyond the simple notion of sending a disclosure. When a terrorist attack strikes somewhere in the world, we immediately reach out to our counterpart in that jurisdiction and offer our full support. When terrorist attacks occurred on Canadian soil in October 2014, and most recently in October 2017, our friends at FinCEN reached out to us and offered immediate assistance, and in return, we've reached out to them in times of need.

We have also contributed to numerous projects with partner countries under the leadership of the Financial Action Task Force such as the modernization of terrorist financing indicators in addition to regular updates regarding Islamic State of Iraq and the Levant's financing capabilities, which also includes other affiliates such as Al Qaeda.

We also contributed to the Egmont Group's ISIL multilateral project which began in February 2015. The first phase of this project focused on information sharing amongst financial intelligence units and developing regional profiles of foreign terrorist fighters. The second phase, which was just recently completed, focused on financial facilitation networks and intermediaries for foreign terrorist fighters. This year-long effort involved the sharing of tactical-level intelligence amongst over 25 financial intelligence units, which instigated numerous law enforcement and national security investigations. It also contributed to international arrest warrants, listings on national terrorism sanctions lists, the refusal of numerous travel visas, and an overall enhanced multilateral information sharing of intelligence and typologies.

With the engagement from Canadian businesses and the collaboration between domestic and international partners, we've achieved important results with the objective of protecting Canadians. For example, FINTRAC's financial intelligence was recognized as having contributed to Project SMOOTH, an investigation that led to the conviction in 2015 of two individuals for conspiring to carry out a terrorist attack against a VIA Rail passenger train travelling from New York to Toronto. This investigation was also conducted in partnership with the Federal Bureau of Investigation, which speaks to the successful collaborative efforts between the United States and Canada.

Just last year, FINTRAC's financial intelligence was also recognized as having contributed to Project SWAP, an investigation where a terrorism charge was laid against Kevin Omar Mohamed for participating in the activity of a terrorist group. He was sentenced to four and a half years in prison.

Future Perspective

Greater international collaboration is essential in addressing a global issue such as terrorism financing. We've seen impressive results to date that have stemmed from strong relationships around the world. We must move forward in a united front and enhance our information sharing practices and collaborative efforts.

Under my leadership, we will continue to build on the strong partnerships we've established with the private sector, police, law enforcement, national security agencies and international counterparts to continue to deliver and achieve important results.

We will continue to support key projects on the Consolidated Strategy on Combatting Terrorist Financing at the Financial Action Task Force.

We will work with our financial intelligence counterparts through the Egmont membership to address terrorist financing and continue to develop strategic financial intelligence products to expand the understanding on foreign terrorist fighters and supporters by utilizing the unique financial data available to financial intelligence units.

Before I finish here today, I want to go back to something I said earlier: we know that terrorism financing can come from legitimate sources. When a transaction is done within the legitimate economy, it leaves a trace.

How can we utilize this information in a proactive manner and stop attacks before they even happen?

How do we remain ahead of terrorist supporters and recruiters who regularly find new tools to exploit and fuel their ideology?

These are questions that affect us all and impact each decision we make.

I truly believe that after what we've heard here today, it is clear that when we work together towards a common goal, we all benefit.

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