Presentations and Speeches

Opening Remarks by Luc Beaudry, Assistant Director, Collaboration, Development and Research, Financial Transactions and Reports Analysis Centre of Canada at the House of Commons Finance Committee Parliamentary Review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Ottawa, Ontario
February 14, 2018

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Introduction

Thank you, Mr. Chair, for inviting us to speak with you today regarding your review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Joining me at the table are my colleagues, Dan Lambert, Assistant Director of our Intelligence sector, and Joane Leroux, Assistant Director of our Compliance sector.

I would like to take a few minutes this afternoon to describe FINTRAC's mandate and the role we play in helping to protect Canadians and the integrity of Canada's financial system. I will focus my remarks, in particular, on the contribution the Centre makes to the money laundering and terrorism financing investigations of Canada's police, law enforcement and national security agencies.

FINTRAC's Mandate

FINTRAC was created in 2000 by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to deter, prevent and detect money laundering and terrorist activity financing.

Under this legislation, FINTRAC, police, national security agencies and thousands of businesses across the country all have a role to play in creating a hostile environment for those who seek to abuse our financial system or who threaten the safety of Canadians.

The Act establishes obligations for financial services entities, money services businesses and other businesses subject to the Act to establish a compliance program, identify clients, monitor business relationships, keep certain records and report specific types of financial transactions to FINTRAC—including suspicious transactions.

Recognizing that the overall effectiveness of Canada's anti-money laundering and anti-terrorist financing regime is dependent on businesses submitting high-quality and timely financial transaction reports, FINTRAC employs a comprehensive risk-based compliance program that ensures businesses subject to the Act fulfill their obligations.

Every year, we complete hundreds of compliance examinations across the country, issue policy interpretations and respond to thousands of enquiries in order to facilitate and ensure compliance with the Act. As a result of these efforts and an ever-increasing commitment from Canadian businesses, FINTRAC received nearly 25 million financial transaction reports last year. This is up 20 percent over the past three years.

I would like to emphasize that safeguarding this information is an overarching consideration in all aspects of our operations. Clear principles for the protection of privacy are set out in the Centre's governing legislation, which respects the Canadian Charter of Rights and Freedoms and the Privacy Act, and are reinforced by FINTRAC's own operational policies and security measures.

Combatting Money Laundering

The financial transaction reports we receive from Canadian businesses every year are the lifeblood of our analysis and make it possible for us to do our intelligence work and, ultimately, to help protect Canada and Canadians.

Last year, we provided 2,015 disclosures of financial intelligence to our regime partners to aid their investigations of money laundering, terrorist activity financing and threats to the security of Canada. Our financial intelligence is used to assist money laundering investigations in the context of a wide variety of criminal investigations, where the origins of the suspected criminal proceeds were linked to fraud, drug trafficking, corruption and other criminal offences.

The effectiveness of Canada's regime can be seen most clearly with Project Protect, a unique public-private sector initiative that mobilized partners across the country over the past couple of years to combat human trafficking in the sex trade.

With this initiative, Canadian financial institutions committed to tracking the money laundering associated with this illicit activity as a priority of their compliance programs. For our part, we worked closely with these institutions and our police and law enforcement partners to develop an Operational Alert. This Alert focused on the types of financial transactions, financial patterns and account activities that may raise suspicions of money laundering related to human trafficking and trigger the requirement to send a suspicious transaction report to FINTRAC.

As a result of these efforts, we received nearly 4,000 suspicious transaction reports which led to the production of over 200 financial intelligence disclosures. To put a human face on this initiative, it has led directly to dozens of young Canadian women being rescued from the most deplorable conditions imaginable over the past year.

This type of public-private sector initiative is the first of its kind in the world and we are pleased to say that there has been tremendous interest internationally in understanding and replicating it.

Here in Canada, we are hoping for the same level of success with Project Guardian, a similar public-private sector partnership that will see the mobilized efforts of Canadian financial institutions and money services businesses, FINTRAC and Canada's law enforcement agencies brought to bear to combat the trafficking of illicit fentanyl.

Combatting Terrorism Financing

As we continue to contribute financial intelligence to the money laundering investigations of Canada's police and law enforcement agencies, we are also playing a key role in combatting terrorist activity financing in Canada and abroad.

Last year, FINTRAC provided 462 financial intelligence disclosures relevant to terrorist activity financing and threats to the security of Canada.

The Centre was recognized by the RCMP for its contribution to Project SWAP when 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.

Our financial intelligence was also recognized as part of Project Smooth, which led to the conviction of two individuals for conspiring to carry out a terrorist attack against a VIA Rail passenger train travelling from New York to Toronto.

Given the transnational nature of money laundering and terrorist activity financing, FINTRAC also plays a leadership role in the international efforts taking place at the Financial Action Task Force, within the Egmont Group of international financial intelligence units, and in other multilateral organizations to help combat these illicit activities worldwide.

Conclusion

I would like to conclude by emphasizing that the success of Canada's anti-money laundering and anti-terrorist financing regime is dependent on the dedicated efforts of all players, from businesses on the frontlines of Canada's financial system to prosecutors securing the conviction of money launderers and terrorist financiers. Together, we are producing significant results for Canadians.

Thank you, Mr. Chair. We will be pleased to answer your questions.

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