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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: Economic and Fiscal Policy Framework
Start date of the horizontal initiative: June 2000
End date of the horizontal initiative: 2009–10
Total federal funding allocation (start to end date): $455,408 (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 and 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 renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).The NICML was expanded and is now known as Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime. In December 2006, Bill C-25 amended the PCMLTFA to ensure Canada’s legislation remains consistent with international anti–money laundering and anti–terrorist financing standards as set out by the Financial Action Task Force (FATF) and is responsive to areas of domestic risk. Amendments included 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 Act.
Shared outcomes: 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 Anti–Money Laundering and Anti–Terrorist Financing Regime is a horizontal initiative comprised of 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 (PPSC), FINTRAC, the Canada Border Services Agency (CBSA), the Canada Revenue Agency (CRA), the Canadian Security Intelligence Service (CSIS), and the Royal Canadian Mounted Police (RCMP); non-funded partners include Public Safety Canada (PS), the Office of the Superintendent of Financial Institutions (OSFI), and Foreign Affairs and International Trade Canada. An interdepartmental ADM-level group and working group, consisting of all partners and led by the Department of Finance Canada, has been established to direct and coordinate the government’s efforts to combat money laundering and terrorist financing activities. In addition, the Department of Finance Canada also chairs a Public/Private Sector Advisory Committee. This is a broad-based advisory committee that includes both public and private sector representatives to provide general guidance for Canada’s Anti–Money Laundering and Anti–Terrorist Financing policy.
|Federal Partner||Federal Partner Program Activity||Name of Federal Partner's Program||Total Allocation (from Start to End Date)||Planned Spending for
|Actual Spending for
|Expected Results for
|Results Achieved in
|Department of Finance Canada||Financial Sector Policy||Canada’s
Anti–Money Laundering and Anti–Terrorist Financing Regime
|2,700||300||295||Effective oversight of Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime (the Regime).||The Department of Finance Canada continued to address policy and operational issues to ensure Canada has an effective Anti–Money Laundering and Anti–Terrorist Financing Regime. The Department also hosted a spring and fall meeting of the Public/Private Sector Advisory Committee and one ADM-level meeting.|
|Undertake a 10-year Treasury Board–mandated evaluation of the Regime to assess effectiveness and access to continued funding.||Initiated the 10-Year Evaluation of the Regime and led the interdepartmental working group for the evaluation. The evaluation will be completed in 2010–11.|
|Monitor the financial sector for money laundering and terrorist financing risks and other emerging illicit financing risks.||Developed and tabled amendments to the PCMLTFA related to counter-measures to tackle illicit financing and making tax evasion a predicate offence for money laundering. Final publication of new regulations on Credit Union Centrals was also completed.|
|Participate in international forums related to combating money laundering and terrorist financing, in particular the G7 Financial Experts meetings, the Financial Action Task Force (FATF), the Caribbean Financial Action Task Force (CFATF), and the Asia Pacific Group (APG) on Money Laundering.||The Department actively participated and undertook a leadership role at the FATF, CFATF, and APG plenary and intercessional meetings and the G7 Financial Experts meetings.
As the head of Canada’s delegation at international anti–money laundering and combating the financing of terrorism (AML/CFT) forums, the Department:
– coordinated federal partners’ contributions;
– played a challenge function in the FATF, APG, and CFATF mutual evaluation processes, a comprehensive peer review process that is the cornerstone of the global implementation of FATF Standards
(the 40 + 9 Recommendations);
– contributed to the development of FATF policy and standards and the analysis of new AML/CFT trends and typologies;
– engaged in the FATF International Co-operation Review Group (ICRG) to identify and monitor high-risk jurisdictions, including chairing the Americas Regional Review group;
– identified and leveraged funds to support capacity building and technical assistance for the APG and CFATF as well as training for their individual members; and
– provided advice and guidance to CFATF member countries on the implementation of the FATF 40 + 9 Recommendations and on governance and capacity issues.
|Department of Justice Canada||The National Initiative to Combat Money Laundering||Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime||7,000||100||100||The Criminal Division of the Department of Justice Canada plays a significant role in the Regime. For 2009–10, 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. 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.||In 2009–10, the Department of Justice Canada contributed to domestic policy development related to money laundering by regularly providing legal advice in this area and through its participation on departmental committees addressing terrorist financing. Justice Canada also contributed to FATF-related policy issues through extensive input on FATF evaluations and reports as well as its attendance and active participation at FATF plenary meetings and participation in the FATF project on confiscation.|
|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||9,200||2,300||3,028||PPSC plays a significant role in the Regime. For 2009–10, it is anticipated that information provided to law enforcement by FINTRAC will result in more prosecutorial legal advice being provided to law enforcement. It will also result in additional charges being laid for money laundering and terrorist financing offences and, consequently, an increased workload for prosecutors. 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 infractions of the Act. 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 resources will be used to carry out work related to the FATF, including attending the FATF international meeting.||New Regime-related charges laid over the course of 2009–10 included 5,910 charges for the possession of proceeds of crime, 40 money laundering charges under the provisions of the Criminal Code, and 47 charges under the PCMLTFA. (There were no charges laid related to the terrorist financing provisions of the Criminal Code
during this period.)
For these new Regime-related charges, provision of legal advice was recorded by in-house counsel against 54% of the possession of proceeds of crime files, 47% of the money laundering files, and 28% of the PCMLTFA files. Contrary to previous years, PPSC did not obtain any production orders under section 60 of the PCMLTFA.
Finally, over the course of 2009–10, PPSC counsel provided both formal and ad hoc training to law enforcement personnel over the course of investigations. Resources were also dedicated to policy development and coordination to ensure consistency across all regions.
|Financial Transactions Reports Analysis Centre of Canada (FINTRAC)||Collection, analysis, and dissemination of financial information||Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime||269,085||37,500||40,315||FINTRAC produces technology-driven financial intelligence analysis and case disclosures, which are widely used by law enforcement and intelligence agencies, with a program that fosters compliance by the reporting entities.||In 2009–10, FINTRAC disclosed 579 cases of suspected money laundering, terrorist financing, and threats to the security of Canada to law enforcement and security partners. This represents a continued increase in the number of cases—a slight increase compared to the 556 cases disclosed in 2008–09 and a significant increase over the
210 cases disclosed in 2007–08. In 2009–10, the average timeliness of case analysis improved by 17%, going from 82 days to 68 days. This was achieved with increasingly positive feedback from law enforcement and security partners on the usefulness, relevance, and timeliness of case disclosures.
FINTRAC also continued to fulfill the needs of various partners and stakeholders in producing and disseminating a wide range of strategic financial intelligence assessments, briefs, and reports. These products served to inform government policy and decision makers as well as reporting entities about money laundering and terrorist financing issues, methods, indicators, and case studies, which enabled them to better combat money laundering and terrorist financing.
In order to increase the coverage rate of compliance assessments, FINTRAC began conducting desk examinations in tandem with onsite examinations of reporting entities’ level of compliance with their obligations under the PCMLTFA. As a result, FINTRAC completed 691 examinations by fiscal year end, an increase of 52% over the previous year, of which 327 (47%) were onsite examinations and 364 (53%) were desk examinations.
In 2009–10, FINTRAC completed the successful implementation of the administrative monetary penalties (AMP) regime. In its first year, 14 AMPs have been issued, and of these, 7 were publicly named on the FINTRAC website. The 2009–10 fiscal year was also the first full year of operation for the money services businesses (MSB) registry. During the fiscal year, an additional 223 MSBs registered with FINTRAC, bringing the total entities registered to 954.
|Canada Border Services Agency (CBSA)||Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime||57,008||7,727||7,745||CBSA Border Services Officers are responsible for the enforcement of the cross-border currency reporting program, which includes conducting searches, questioning individuals, and seizing non-reported or falsely reported currency and suspected proceeds of crime. In addition, FINTRAC discloses information to CBSA Immigration, which plays a key role
in denying the use of Canadian territory to criminals and persons who pose security threats to Canada.
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.
|During 2009–10, CBSA performed more than 2,480 seizures under the PCMLTFA, totalling over $40 million. Approximately $8 million of this total was forfeited to the Crown and penalties have been assessed in excess of $1 million. Over 200 seizures have resulted in forfeiture as suspected proceeds of crime or funds for the use of terrorist activities.|
|Canada Revenue Agency (CRA)||Charities Directorate||Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime||7,429||4,976||3,631||CRA has responsibility for administering the registration system for charities under the Income Tax Act. This recognizes that the existence of a strong regulatory deterrence against terrorist abuse of charities contributes to suppressing the financing of terrorism in Canada and to protecting and preserving the social cohesion and
well-being of Canadians.
CRA’s regulatory oversight of charities has been strengthened by the enactment of complementary measures under the Charities Registration (Security Information) Act and the PCMLTFA and by changes to the Income Tax Act authorizing broader information sharing between Regime agencies. Under these authorities, intelligence provided to CRA assists in its mandate to protect the integrity of the registration system for charities, and information disclosed by the CRA can be used for investigative purposes.
For 2009–10, it is anticipated that CRA will use the resources it receives to strengthen capacity to identify and respond to cases involving possible links to terrorism through investments in facilities, IT development, and an increase in ongoing, direct program full-time equivalents (FTEs).
|Results delivered in 2009–10 focused on the following:
– facilities development (projects delivered on time and on budget);
– procuring and implementing technological tools and systems to enhance analytical and enforcement capabilities;
– redesigning our organizational structure;
– staffing for skill sets needed to respond to current and future operational needs and to attract seasoned, job-ready intelligence officers and newly graduated professionals in intelligence; and
– staff training.
The normal business of reviewing applications for charitable registration, monitoring of registered charities, and exchanging information under legal authorities with Regime partners, in relation to risks of support for terrorist activities, continued throughout. The Charities Directorate also continued to develop and enhance relationships and training with Regime partners, improve access to intelligence information, and provide a strong CRA presence in interdepartmental committees addressing cross-cutting policy and review activities relevant to Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime.
|Canada Revenue Agency (CRA)||Special Enforcement Program||Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime||21,568||2,200||2,413||CRA is focusing on the following four pillars:
– participating in committees and initiatives to manage and enhance the Regime;
– enhancing our operational relationship with FINTRAC and other partners in the Regime;
– conducting research and analysis; and
– contributing to the work of international organizations to enhance cooperation between tax administrations and anti–money laundering and anti–terrorist financing authorities by participating in the Organisation for Economic Co-operation and Development’s Sub-Group on Tax Crime and Money Laundering.
All disclosures received from FINTRAC are thoroughly reviewed and those with potential are selected for audit by the Special Enforcement Program. The projected number of audits is 90, with a projected federal tax recovery of $7,000,000.
|Total number of audits completed: 108
Total earned by tax audits: $16,812,471
Cases referred for investigation: 8
Cases accepted by investigation: 3
|Royal Canadian Mounted Police (RCMP), Money Laundering Units||Money Laundering Units||Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime||55,898||6,872||3,657||Enhanced national and international opportunities for the detection and investigation of money laundering activities.||Project Mercury was a joint anti–cash smuggling operation that took place from April 19 to 22, 2010. Participants in the operation included CBSA, members of the RCMP Integrated Proceeds of Crime (IPOC) Units, RCMP Integrated National Security Enforcement Teams (INSET), and FINTRAC. Both inbound and outbound flights were targeted at five international airports: Ottawa, Montréal, Toronto, Vancouver, and Calgary.|
|Development of FINTRAC disclosures, as well as other intelligence, to a point where resources from Integrated Proceeds of Crime Units or elsewhere in the RCMP could then be directed toward investigations in an effort to increase seizures.||There have been 25 seizures linked to FINTRAC disclosures in 2009, with a value of $4,997,754.|
|The resource level in Canada’s three major urban centres (Vancouver, Toronto, and Montréal) was increased in 2007 and continues to positively impact the investigative capacity in those centres to conduct investigations on leads related to Canada’s anti–money laundering regime.||The “Big Three” (Vancouver, Toronto, and Montréal) currently have six major money laundering investigations open in 2009.|
|RCMP, Anti–Terrorist Financing Team)||Special Initiatives||Canada’s Anti–Money Laundering and Anti–Terrorist Financing Regime||22,937||5,158||5,579||Through the gathering and analysis of financial intelligence, the Anti–Terrorist Financing Team (ATFT) will focus on converting that intelligence into proactive investigations, thus enhancing its ability to detect and deter terrorist financing activities.||ATFT continues to provide support to six project status investigations of terrorist financing across Canada, has initiated two new investigations, and continues to assist in a number of requests for information received from domestic and international agencies.
ATFT, in conjunction with CBSA, CSIS, FINTRAC, and RCMP Proceeds of Crime took part in two proactive law enforcement efforts code-named Atlas and Mercury. Proceeds of crime, money laundering, and terrorist financing enforcement agencies from the RCMP and CBSA took part in these three-day cash courier interdiction actions held concurrently at selected international airports.
An investigation in British Columbia by the National Security Financial Investigation Unit led to the conviction of a subject for terrorist financing. Project Needle nears completion with the disruption of a Liberation Tigers of Tamil Eelam (LTTE) terrorist financing and procurement cell. The US has convicted and sentenced three of the six Canadians for terrorist financing and procurement charges. Two other Canadians have been ordered extradited and one other subject awaits extradition to the US to face the same charges.
In November 2009, a major project investigation concluded with the arrest of 30 individuals in Montréal for credit card fraud, counterfeiting government identification such as passports and visas, and facilitating illegal immigration. ATFT members formed part of the investigation team because of national security concerns and links to terrorism, movement of terrorists across international borders, and terrorist financing. No charges were laid pursuant to section 83 of the Criminal Code.
Forfeiture hearings are ongoing regarding money and property seized pursuant to two investigations of the World Tamil Movement.
ATFT continues to provide training to the RCMP and partner agencies. Financial investigative members from the various INSETs and selected partner agency representatives from CSIS, CRA, FINTRAC, and the UK attended and presented at the fall 2009 course and the February 2010 course. The next course is slated for the fall of 2010 in Vancouver.
ATFT continues to support FATF, the APG, and the Middle East and North Africa Financial Action Task Force (MENAFATF). ATFT members joined the Canadian delegation to MENAFATF for the first time this past year. ATFT members assisted in training provided to the Royal Malaysian Police and to the African Union. ATFT continues its membership in the Bi-Lateral Working Group on Terrorist Financing with the FBI and CSIS, meeting each quarter. ATFT is also a founding member of the International Working Group on Terrorist Financing, which meets yearly. Two members of ATFT attended the annual conference in Australia in May 2010.
ATFT is now tasked with providing due diligence checks for prospective foreign investors under the revised Investment Canada Act, which now includes national security provisions.
|1. Certain partners in the Anti–Money Laundering and Anti–Terrorist Financing Regime are exempt from reporting; therefore, the figures presented in the table may not sum to the total amount allocated.|
Comments on variance:
PPSC: Actual spending exceeds planned spending by approximately $0.7 million. Variance is due to the significant increase in the number of charges related to proceeds of crime.
FINTRAC: The planned spending amount did not include the additional Treasury Board–approved funding that was received over the 2009–10 fiscal year. Among the additional resources received are the Strategic Review Reinvestments, NICML re-profiled funds from 2008–09, Treasury Board adjustments for Paylist Requirements (Vote 30), and Employee Benefits Plan year-end adjustments.
CRA, Charities Directorate: Variance is due to classification and staffing processes that have taken longer than anticipated and are continuing in 2010–11.
RCMP, Money Laundering Units: Variance is due to reduced budget allocation and vacancy rates across the program. Similar constraints are expected for 2010–11.
Results to be achieved by non-federal partners: Not applicable
Chief, Financial Crimes Section