Thank you so much.

Good morning. Thank you for the invitation to speak about Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime in the context of the parliamentary review of the Proceeds of Crime and Terrorist Financing Act.

I would like to start my remarks by briefly outlining the state of money laundering and terrorist financing in Canada and explaining why it is important to address these serious financial crimes. I also plan to explain the regime, the role of the Act, and the many regime partners working on financial crime in Canada. I would further situate my remarks in the context of important recent international and domestic reviews of Canada’s regime, followed by the responses the government has taken since the last parliamentary review in 2018.

Money laundering and terrorist financing are serious financial crimes that pose real threats to the safety of Canadians and the integrity of Canada's financial system. Financial crime is not a victimless crime. It affects our society by supporting, rewarding and perpetuating broader criminal and terrorist activities in Canada.

The proceeds of crime being laundered in Canada are generated through predicate crimes such as cyber-fraud, automotive theft, human trafficking and drug trafficking, including in fentanyl, which has killed many Canadians. Money laundering can affect affordability by driving up prices in sectors where it is present. For example, the expert panel on money laundering appointed by the Government of British Columbia estimated that money laundering in B.C.'s real estate sector raised housing prices by approximately 5% in 2018. Also, terrorist financing supports the activities of domestic and international terrorists, including deadly and destructive attacks in Canada and abroad.

The complex efforts criminals employ to disguise the proceeds of crime make the scope of money laundering and terrorist financing in Canada difficult to estimate. That being said, in 2021, a report by Criminal Intelligence Service Canada estimated that between $45 billion and $113 billion Canadian is laundered in Canada each year.

Canada maintains an extensive regime to detect, deter and disrupt financial crimes. The regime consists of 13 departments and agencies, each with their respective mandates, led by the Department of Finance. The regime is established by federal statutes, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Criminal Code.

The PCMLTFA is an essential component of Canada's regime. The act establishes the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, as it's more commonly known, as Canada's anti-money laundering and anti-terrorist financing regulator and financial intelligence unit and defines its operations. It also requires financial institutions and designated non-financial businesses and professions to report certain financial transactions to FINTRAC, have compliance and training programs in place, identify clients and keep records.

Collectively, businesses subject to the PCMLTFA and its regulations are known as “reporting entities”. There are over 24,000 reporting entities that play a critical frontline role in efforts to prevent and detect money laundering and terrorist financing in Canada. Reporting entities include banks, credit unions, casinos, real estate professionals, money services businesses, accountants, dealers in precious metals and stones, and the armoured car sector.

Canada's regime operates based on three interdependent pillars. The Department of Finance’s role aligns with the first pillar: policy and coordination. The department is responsible for leading the assessment of money laundering and terrorist financing risks and developing and coordinating domestic and international policy. Other regime partners also play an important role in informing and developing policy, including Public Safety, Justice, Global Affairs, and Innovation, Science, and Economic Development Canada.

The role played by FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, aligns with the second pillar of the regime, prevention and detection. It is responsible for promoting, supervising, and enforcing anti-money laundering and anti-terrorist financing compliance and collecting, analyzing, and disseminating financial and other intelligence.

The third pillar, investigation and disruption, involves identifying, investigating, prosecuting, and sanctioning money laundering and terrorist financing offences. Responsibility for implementing this pillar rests with federal agencies, including the Royal Canadian Mounted Police, the Canada Border Services Agency, the Canada Revenue Agency, the Canadian Security Intelligence Service, and the Public Prosecution Service of Canada.

While the regime as a whole falls under federal jurisdiction, there are many areas with shared provincial and territorial responsibility. Provincial and municipal law enforcement bodies, provincial Crown attorneys' offices or prosecution services, civil forfeiture offices, and provincial regulators play important roles in combating the laundering of proceeds of crime and terrorist financing.

Canada’s regime has been the subject of a number of domestic and international reviews in recent years. These reviews found that Canada’s regime generally has a strong legal framework, but achieving operational effectiveness remains a persistent challenge. Other criticisms of Canada’s regime include challenges in the ability to use financial intelligence, ensure transparency of legal persons and arrangements, successfully investigate and prosecute money laundering, and deprive criminals of the proceeds of crime. The government acknowledges these important reviews and is committed to bringing forward measures to strengthen Canada’s regime.

The rapidly evolving and complex nature of financial crime requires ongoing changes to improve and modernize Canada’s regime. In recent years, the government has brought forward measures to provide tools to support law enforcement investigations and prosecutions, enhance information sharing and address risks posed by new technologies and sectors.

Since 2019, the government has made investments of $319 million, with close to $50 million ongoing, to strengthen data and inform technology resources, financial intelligence, information sharing and investigative capacity to support money laundering investigations in Canada. Significant funding also went to FINTRAC and the RCMP.

A public and searchable beneficial ownership registry of federal corporations was launched in January 2024. It will address the use of anonymous Canadian shell companies to conceal the true ownership of property, business, or other valuable assets with a view to laundering money, avoiding taxes, evading sanctions, or interfering with our democracy.

The need for a beneficial ownership registry was a key finding of the mutual evaluation by FATF, the Financial Action Task Force, and of the Cullen Commission and the 2018 parliamentary review of the Proceeds of Crime and Terrorist Financing Act. The federal government will continue calling upon provincial and territorial governments to advance a national approach to beneficial ownership transparency.

Budget 2023 also announced a suite of legislative and regulatory measures to strengthen the investigative, enforcement, and information sharing tools of Canada’s regime. This includes changes to: enhance information sharing powers within the finance portiolio and allow FINTRAC to better support decision making, including on national security risks; allow the Minister of Finance to direct reporting entities to undertake enhanced due diligence to help counter risks to the financial system, including from foreign interference; and require the financial sector to report information on sanctioned assets to FINTRAC.

In June 2023, the government launched a public consultation on strengthening the regime. The government took a broad and comprehensive look at Canada’s regime and considered many potential measures for its improvement.

This included improving operational effectiveness and enforcement outcomes, facilitating greater information sharing, modernizing legislative and regulatory obligations while balancing the burden on the private sector, and responding to national and economic security risks that have evolved in the past two decades since the PCMLTFA was first enacted, including the risks posed by Russia’s illegal invasion of Ukraine.

The government received 129 written submissions from a wide variety of stakeholders, which indicated strong support for further measures to strengthen Canada’s regime to improve operational results. For example, submissions spoke to support for dedicated anti-money laundering and anti-terrorist financing investigative and prosecutorial resources and support for the creation of a Canadian financial crimes agency, support for the creation of a corporate beneficial ownership registry and support for greater information sharing, including private-to-private and public-to-private information sharing to detect, deter and disrupt money laundering and terrorist financing.

Many suggestions were made to strengthen and/or modernize criminal justice measures to combat money laundering and terrorist financing, such as proposals to reflect the use of new technologies and address third party money laundering. Regarding sanctions evasion and threats to the security of Canada, most stakeholders agreed that FINTRAC should be enabled to provide intelligence on these matters, though some were concerned regarding the possible dilution of the PCMLTFA beyond its core focus on anti-money laundering and anti-terrorist financing.

Finally, submissions indicated support for taking a risk-based approach to anti-money laundering and anti-terrorist financing regulation, including to the expansion of the framework to new entities, and many suggestions were also made to improve regulatory compliance and streamline administrative burden while maintaining the intelligence value of reporting to FINTRAC.

In summary, the government is commited to continuing to strengthen Canada’s regime. The regime seeks to combat money laundering and terrorist financing while respecting the constitutional division of powers, the Canadian Charter of Rights and Freedoms and the privacy rights of Canadians. The regime relies on multiple partners and all levels of government to work collectively to detect, deter and disrupt illicit financial flows.

The government has undertaken investments and other measures in recent years to strengthen the framework and respond to evolving risks.

The government has undertaken investments and other measures in recent years to strengthen the framework and respond to evolving risks. The parliamentary review of the PCMLTFA provides an important means to continue to improve the regime, and the government is ready to support the Standing Committee on Finance in carrying out the review.

I, as well my colleagues Ms. Hunt and Ms. Davidson, would now be happy to answer any questions.

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