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Table 10: Horizontal Initiatives


Name of Horizontal Initiative: Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime—formerly the National Initiative to Combat Money Laundering (NICML)
Name of Lead Department: Department of Finance Canada Lead Department Program Activity: Financial Sector Policy
Start Date of the Horizontal Initiative:June 2000 End Date of the Horizontal Initiative:2009–10
Total Federal Funding Allocation (start to end date):$433,700 (thousands)
Description of the Horizontal Initiative (including funding agreement):

The National Initiative to Combat Money Laundering (NICML) was formally established in 2000 as part of the government's ongoing effort to combat money laundering in Canada. Legislation adopted that year, the Proceeds of Crime (Money Laundering) Act (PCmlA), created a mandatory reporting system for suspicious financial transactions, large cross-border currency transfers, and certain prescribed transactions. The legislation also established the Financial Transactions Reports Analysis Centre of Canada (FINTRAC) to collect and analyze these financial transaction reports and to disclose pertinent information to law enforcement and intelligence agencies. In December 2001, the PCmlA was amended to include measures to fight terrorist financing activities and was renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

The NICML is now known as Canada's Anti–Money Laundering and Anti–Terrorist Financing (AML/ATF) Regime. In December 2006, Bill C-25 amended the PCMLTFA to ensure that Canada's legislation remains consistent with international AML and ATF standards as set out by the Financial Action Task Force on Money Laundering (FATF) and is responsive to areas of domestic risk. Amendments include enhanced client identification requirements, the creation of a registration regime for money services businesses, and the establishment of an administrative and monetary penalties regime to deal with lesser infractions of the PCMLTFA.

Shared Outcome:To detect and deter money laundering and the financing of terrorist activities and to facilitate the investigation and prosecution of money laundering and terrorist financing offences
Governance Structure:Canada's AML/ATF Regime is a horizontal initiative comprising both funded and non-funded partners. The funded partners include the Department of Finance Canada, the Department of Justice Canada, the Public Prosecution Service of Canada, FINTRAC, the Canada Border Services Agency (CBSA)—Immigration and Customs, the Canada Revenue Agency (CRA), and the Royal Canadian Mounted Police (RCMP); non-funded partners include Public Safety Canada (PS), the Office of the Superintendent of Financial Institutions Canada (OSFI), and the Canadian Security Intelligence Service (CSIS). An interdepartmental Assistant Deputy Minister (ADM)–level group and working group, consisting of all partners and led by the Department of Finance Canada, direct and coordinate the government's efforts to combat money laundering and terrorist financing activities. In addition, a public-private sector advisory committee was established to facilitate input from the private sector participants in the AML/ATF Regime.

 


Federal Partners Federal Partner Program Activity Names of Programs for the Federal Partners Total Allocation (from start to end date)
(in thousands)
Planned Spending for 2007–08
(in thousands)
Actual Spending in 2007–08
(in thousands)
Expected Results for 2007–08 Results Achieved in 2007–08
Department of Finance Canada Financial Sector Policy Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $3,000 $300 $296 1. Consultations with public and private sector stakeholders to refine regulatory proposals 1. Consultations with the public and private sectors are ongoing. A public-private sector advisory committee was established to facilitate discussions among private and public sector members of the Regime.
          2. Published regulations pursuant to the amended PCMLTFA 2. Three sets of regulations pursuant to Bill C-25 were published in final form over the course of FY 2007–08. These regulations enhance customer due diligence, record keeping, and reporting requirements for financial institutions and intermediaries; create a registration scheme for money services businesses; bring three new reporting sectors under the Regime; and create an administrative monetary penalties scheme.
          3. Finalizing of the FATF mutual evaluation of the AML/ATF Regime 3. The FATF finalized its evaluation of Canada's AML/ATF Regime and released its findings in February 2008.
          4. Effective oversight of Canada's AML/ATF Regime 4. The Department of Finance Canada continues to lead the Regime and make available avenues to address policy and operational issues to ensure Canada has an effective AML/ATF Regime.
          5. Support for the 2006–07 Canadian presidency of the FATF 5. Canada successfully concluded its one-year presidency of the FATF on June 30, 2007. During this time, six countries underwent assessment, membership of the FATF grew, and communications with the private sector were strengthened.
Department of Justice Canada (JUS) The National Initiative to Combat Money Laundering Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $9,300 $100 $100 The Criminal Division of JUS plays a significant role in the regime. For 2007–08, it is anticipated that the Criminal Division will use the resources it receives to carry out work related to the FATF, including attending FATF-related international meetings, which will total five (5) over the relevant period. Attendance at the meetings is of particular importance during 2007, as Canada's AML/ATF Regime is being evaluated this year against the FATF's 40 and 9 Special Recommendations, and the presence of JUS is necessary to ensure proper discussions of the Canadian evaluation report. In addition, the Criminal Division will be the relevant authority to respond to all legal issues that develop out of that evaluation. Resources will also be allocated to ensure the Criminal Division's continued involvement in policy development relating to money laundering and terrorist financing. Finally, the Human Rights Law Section will receive money to deal with any ancillary constitutional issue raised during the prosecutions. Canada's AML/ATF Regime was evaluated by the FATF, and Criminal Division counsel fully participated in all domestic discussions surrounding the evaluation report and attended two FATF meetings and an intercessional meeting with the evaluators. Division counsel attended a Caribbean Financial Action Task Force (CFATF) Plenary meeting, working with the Department of Finance Canada in preparatory and plenary meetings. Division counsel also participated as an FATF legal expert, as part of the FATF assessment team in an evaluation of Japan's Anti-Money Laundering and Combating the Financing of Terrorism Regime. In addition, the Criminal Division was the relevant authority to respond to all legal issues that develop out of the evaluation of Canada. Resources were also expended to ensure the Criminal Division's continued involvement in policy development relating to money laundering and terrorist financing. Finally, the Human Rights Law Section dealt with any ancillary constitutional issue raised during the prosecutions.
Public Prosecution Service of Canada (PPSC) Addressing criminal issues to contribute to a safer world for Canada Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $6,900 $2,300 $2,000 PPSC plays a significant role in the Regime. For 2007–08, it is anticipated that information provided to law enforcement by FINTRAC will result in more prosecutorial legal advice's being provided to law enforcement. It will also result in additional charges' being laid for money laundering and terrorist financing offences and thus result in an increased workload for prosecutors. The PPSC also has responsibilities related to the PCMLTFA. The planned work includes applications for production orders, increases in border seizure and forfeiture work associated with suspected proceeds of crime, and prosecutions related to offences created within the PCMLTFA. In addition, resources will be used to provide training to law enforcement personnel and prosecutors and for the development and coordination of policy as it relates to money laundering and terrorist financing. Finally, PPSC personnel will carry out work related to the FATF, including attending the FATF international meeting. For 2007–08, PPSC opened 51 files with, among other charges, a charge of either money laundering or a charge under the PCMLTFA. These 51 files contained 6 charges of money laundering and 62 charges under the PCMLTFA, for a total of 68 charges. In addition, Crown counsel worked on 83 carry-over files with, among other charges, a charge of either money laundering or a charge under the PCMLTFA. These files contained 16 charges under the PCMLTFA and 285 charges of money laundering, for a total of 301 charges. Over this time period, PPSC counsel also obtained 11 production orders under section 60 of the PCMLTFA.
FINTRAC Collection, analysis, and dissemination of financial information Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $269,085 $38,595 $35,800 Technology-driven financial intelligence analysis and case disclosures that are widely used by law enforcement and intelligence agencies with a program that fosters compliance by the reporting entities

Implementation of amendments contained in Bill C-25

FINTRAC continued to make case disclosures of financial intelligence to law enforcement agencies and national security agencies. The increasingly complex cases that were disclosed pinpointed new suspects and financial transactions and triggered new investigations or provided significant input to ongoing investigations or prosecutions.

FINTRAC continued to expand ongoing compliance activities and outreach efforts, which include conducting over 370 presentations, meetings, and seminars with reporting entities and associations.

Through macroanalysis of its case disclosures and the associated transaction reports, FINTRAC continued to gather valuable insights into suspected money laundering cases and suspected terrorist financing activity. By sharing strategic information, FINTRAC supported the work of policy makers, domestic partners in law enforcement and national security, the financial community, and international partners.

FINTRAC also undertook to implement and integrate into its operations the changes resulting from Bill C-25. Among other actions, this included the development of a registration system for money service businesses, as well as an administrative monetary penalty regime designed to serve as a complementary tool to bring contraveners into compliance.

Canada Border Services Agency (CBSA) Security Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $55,952 $7,525 $7,500 The CBSA is responsible for administering Part 2 of the PCMLTFA, "Reporting of Currency and Monetary Instruments." The Cross-Border Currency Reporting (CBCR) Program requires that travellers report the importation and exportation of currency and monetary instruments equal to or greater than CAD$10,000. Part 2 also provides for the enforcement element of the CBCR Program, which includes conducting searches, questioning individuals, and seizing non-reported or falsely reported currency and suspected proceeds of crime. Since January 2003, the CBSA has assumed new responsibilities for administrating and enforcing Part 2 of the PCMLTFA. Under this legislation, all imported or exported currency or monetary instruments valued at more than CAD$10,000, must be reported to the CBSA. During 2007–08, the CBSA participated in more than 2,000 seizures under the PCMLTFA, the value of the seizures totalling over $39 million. Approximately $6 million of this total was forfeited to the Crown.
Canada Revenue Agency (CRA) Special Enforcement Program Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $11,000 $2,200 $2,228 Projected number of audits is 105, with a projected federal tax recovery of $8,956,905 Total number of audits is 99 with a federal tax recovery of $11,304,163
RCMP—Money Laundering Units Money Laundering Units Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $57,103 $7,117 $6,704 Enhanced national and international opportunities for the detection and investigation of money laundering activities

Development of FINTRAC disclosures, as well as other intelligence, to a point where resources from Integrated Proceeds of Crime (IPOC) units or elsewhere in the RCMP could then be directed toward investigations in an effort to increase seizures

Increased resource level in Canada's three major urban centres (Vancouver, Toronto, and Montreal) to help build up the investigative capacity in those centres to conduct investigations on leads related to Canada's AML/ATF Regime

The money laundering branch continues to investigate numerous opportunities for criminals to launder their illicit money both domestically and internationally. These include a report on Canada's casinos, e-currency, white label automatic teller machines (ATM), and pre-paid credit cards.

The money laundering units continue to receive intelligence from a number of sources, which include FINTRAC disclosures and CBSA cross-border currency reporting information. The units are referring this intelligence over to the IPOC units where the intelligence received has contributed to ongoing investigations, prompted the commencement of new investigations, and provided information for potential future use. In 2007–08, IPOC units seized over 400 assets valued at $15,070,923.

Resource levels have increased in Vancouver, Montreal, and Toronto. These money laundering units now have 10 investigators.

RCMP—Anti–Terrorist Financing Team (ATFT) Anti–Terrorist Financing Units Canada's Anti–Money Laundering and Anti–Terrorist Financing Regime $21,360 $5,340 $3,258 Through the gathering and analysis of financial intelligence, the ATFT will focus on converting that intelligence into proactive investigations, thus enhancing the RCMP's ability to detect and deter terrorist financing activities. The ATFT continues to provide support to seven project status investigations of terrorist financing across Canada, support to 15 various investigations, and assistance in response to other agencies' requests.

ATFT continues to provide training to the RCMP and partner agencies. The RCMP and CRA jointly delivered four seminars on the use of the Charities Registration (Security Information) Act (CRSIA) legislation to field units in Ottawa, Halifax, Montreal, and Toronto. The RCMP, CSIS, and CRA have formed a working group to identify charities linked to terrorist financing and utilizing the "certification process" under the CRSIA.

The RCMP assisted with drafting responses to the FATF evaluation of Canada completed in February 2008. The RCMP will continue to assist in FATF typology working groups on terrorism financing and proliferation. Representatives from ATFT recently returned from the CFATF Plenary held in Haiti in May 2008.

Total $433,700 Total $63,477 Total $57,886
Comments on Variances

RCMP—Anti–Terrorist Financing Team: The shortfall in the spending is due to the fact that six regular member positions have yet to be staffed. The field units are up to strength and are not experiencing any exceptional expenditures. Staffing of these vacancies is anticipated by September or October 2008.

Results to be Achieved by Non-Federal Partners (if applicable): Not applicable
18. Contact Information:

Lynn Hemmings
Chief, Financial Crimes Section,

Phone: 613-992-0553

19. Approved by:

Jeremy Rudin
A/Assistant Deputy Minister, Financial Sector Policy Branch

Phone: 613-992-5885

20. Date Approved:

July 2008



[1]     In addition to the transfer payments listed, Wait Times Reduction payments (Part V.1, Federal-Provincial Fiscal Arrangements Act) were made to a third-party trust fund on behalf of provinces and territories in 2004 for the 2004–05 to 2008–09 period and therefore were not identified as charges against the 2007–08 appropriations. Beginning in 2009–10, a Wait Times Reduction Transfer will provide annual cash transfers to provinces and territories until 2013–14, which will be reported starting in the 2009–10 Departmental Performance Report.

[2]      “Sustainable development” is a continually evolving concept based on the integration of social, economic, and environmental concerns. It may be achieved by, among other things, the following:

        (a) the integration of the environment and the economy;

        (b) protecting the health of Canadians;

        (c) protecting ecosystems;

        (d) meeting international obligations;

        (e) promoting equity;

        (f) an integrated approach to planning and making decisions that takes into account the environmental and natural resource costs of different economic options and the economic costs of different environmental and natural resource options;

        (g) preventing pollution; and

        (h) demonstrating respect for nature and the needs of future generations.