IIROC and FINTRAC enhance anti-money laundering partnership

A new agreement between the bodies aims to balance investor protection and minimize the compliance burden on firms

IIROC and FINTRAC enhance anti-money laundering partnership

In the wake of a C.D. Howe report blasting the country’s “weak” protections against money laundering, the Investment Industry Regulatory Organization of Canada (IIROC) and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) have entered into a new Memorandum of Understanding to enhance their partnership in stemming flows of dirty money.

According to a statement by IIROC, the MOU will see the two organizations share with each other findings related to anti-money laundering (AML) that arise from their audits and examinations of Canadian investment firms. Each firm will also keep up close, timely, and on-going communications about any activities that could affect the other as both work to protect Canadian investors.

“Agreements such as this one between IIROC and FINTRAC demonstrate our collaboration to detect and deter any suspicious activities that could threaten the integrity of Canada's capital markets,” said IIROC President and CEO Andrew J. Kriegler.

Kriegler added that their information sharing and cooperation will help streamline the compliance burden on IIROC-regulated firms while maintaining investor protection.

“We are pleased to work more cooperatively with the Investment Industry Regulatory Organization of Canada to more effectively combat money laundering and terrorist activity financing in the investment industry and Canadian financial system,” said FINTRAC Director and CEO Nada Semaan.

Efforts to prevent money laundering in Canada have seen greater scrutiny over the past year. The C.D. Howe report maintained that money launderers’ efforts are effectively invisible, and they are emboldened by their anonymity and the legal obstacles that get in the way of authorities following the trail of ill-gotten proceeds.

“Anonymity and invisibility could be reduced by implementing a publicly accessible registry of beneficial ownership of companies, trusts and real estate,” said the report’s author, Kevin Comeau. Mandatory declarations of beneficial ownership would provide the information for the registry, he said, noting that false declarations would lead to meaningful sanctions. Splitting the register into publicly accessible and strictly confidential sections, he added, would address concerns about privacy of data on identities, financial information, or business operations.

In April, former RCMP officer Peter German released damning findings on anti-money laundering efforts in BC. Pointing to the province’s horse racing, real estate, and luxury car markets as hotbeds for such illegitimate activity, German asserted that there were no federally funded RCMP officers dedicated to preventing those crimes. Speaking to a local publication within the province, B.C. RCMP acting-Cmdr. Kevin Hackett said the finding was based on “a snapshot in time and didn’t capture all personnel who are involved in cases where money laundering is a component.”

Estimates of the size of Canada’s money laundering problem vary, with experts from the C.D. Howe Institute reckoning that it contributes $100 billion to $130 billion to the Canadian economy every year. As of August last year, the Royal Canadian Mounted Police (RCMP) had a far more conservative assessment of $5 billion to $15 billion annually. But in a report issued early this month, an expert panel on money laundering said that $46.7 billion in dirty money flowed through Canada in 2018 alone.


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