Implementation of the Order in Council re: Avoiding Complicity in Mistreatment by Foreign Entities - 2019 Annual Report

Introduction

On September 4, 2019, the Governor in Council (GIC), on the recommendation of the Minister of Finance, issued Directions for Avoiding Complicity in Mistreatment by Foreign Entities (Directions) to the Director and Chief Executive Officer (CEO) of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) via an Order in Council (OIC).

The OIC is the result of the Avoiding Complicity in Mistreatment by Foreign Entities Act (ACMFEA), which authorizes the GIC to issue written directions to deputy heads in respect of:

This report is in fulfillment of subsection 7(2) of the ACMFEA, which stipulates that FINTRAC must publish an unclassified report in respect of the implementation of the Directions during the previous calendar year.

Information-Sharing Arrangements with Foreign Entities

FINTRAC was established as Canada’s financial intelligence unit (FIU) by its governing legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Accordingly, FINTRAC is responsible for facilitating the detection, prevention, and deterrence of money laundering and the financing of terrorist activities while ensuring the protection of personal information under its control.

Engaging in international cooperation in the global effort against money laundering and terrorist activity financing through the sharing of information is an important element in FINTRAC’s ability to fulfill its mandate.

Pursuant to the provisions of the PCMLTFA that pertain to the use and exchange of information with other FIUs, FINTRAC must analyze and assess information it receives, and when certain statutory requirements are met, FINTRAC has the discretionary authority to request particular information from an FIU or disclose particular information to an FIU. The exchange of information with an FIU is possible if FINTRAC has entered into an agreement or arrangement, such as a Memorandum of Understanding (MOU), with the FIU regarding the exchange of such information. 

Implementation of the Directions

FINTRAC is responsible for determining the level of risk associated with the disclosure of, request for, or use of information to or from a foreign partner and applying the appropriate mitigating measures. Accordingly, modifications were made to FINTRAC’s operational policies and procedures.

Interdepartmental Cooperation

To facilitate coordination on the implementation of the Directions between the Government of Canada (GC) departments and agencies that are implicated by the OICFootnote 4, the Information Sharing Coordination Group (ISCG) was established, which is chaired by Public Safety Canada. FINTRAC is an active participant in the ISCG and meaningfully contributes to it through consultation and collaboration with its partners, including the Department of Finance Canada.

Human Rights Assessments (HRAs)

In accordance with the Directions, FINTRAC developed a methodology for assessing the human rights records of the countries with which it has an MOU. These HRAs are one of several tools that FINTRAC officials use in their analysis of whether the disclosure of or request for information would result in a substantial risk of mistreatment of an individual by a foreign entity, and whether information is likely to have been obtained as the result of mistreatment of an individual by a foreign entity.

FINTRAC developed, and continues to strengthen, its policies and procedures for conducting HRAs.

Modifications to Information-Sharing Processes

Modifications were made to FINTRAC’s operational policies and procedures with respect to the use and sharing of information with FIUs.

In particular, the level at which FINTRAC officials seek authorization to use or share information was modified to reflect the Directions. That is, for cases that are assessed by FINTRAC officials as involving either a substantial risk of mistreatment that they are unable to determine whether the risk can be mitigated, or information that is likely to have been obtained through mistreatment, a referral is made to the Director and CEO for determination.

Mitigating Measures

Measures such as the use of caveats or assurances could mitigate the substantial risk of mistreatment in certain situations. Based on the best practices of GC partners, FINTRAC formulated caveats to mitigate the risk that the disclosure of or request for information to or from an FIU would result in a substantial risk of mistreatment of an individual by a foreign entity.

Likewise to the use of caveats, assurances and related record-keeping provisions were added to the operational policies and procedures and they will be sought by FINTRAC, as needed, from an FIU. 

Reporting

In accordance with the ACMFEA, FINTRAC’s implementation of the Directions will be reported to the Minister of Finance, the National Security and Intelligence Committee of Parliamentarians (NSICOP), the National Security and Intelligence Review Agency (NSIRA), and the public on an annual basis.

Training

Awareness and training with respect to the interpretation and implementation of the Directions commenced in 2019 and remains ongoing.

Conclusion

FINTRAC has worked diligently with both internal and external partners to interpret and implement the Directions while fulfilling its mandate and responsibilities under the PCMLTFA.

FINTRAC will continue to engage with its GC partners through the ISCG in its efforts to strengthen its policies and procedures respecting the disclosure of and request for information that would result in a substantial risk of mistreatment of an individual by a foreign entity, and the use of information that is likely to have been obtained through the mistreatment of an individual by a foreign entity.

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