CREA Module Two: The Players
Identify the main categories of money launderers in Canada. Identify the Canadian organizations involved in our national fight on money laundering and terrorist financing. Explain some of the responsibilities of the Canadian organizations regarding money laundering and terrorist financing control. 2
Part 1: The Criminal Element 3
Money Laundering Risk: Crime and Crime Statistics Estimated that narcotics-related offences account for 75% of all money laundered in Canada. Customs and Excise 15% Theft and Fraud - 7.5% 4
Main Categories of Money Launderers: Any crime that generates profits may require money laundering. Those who stay in crime for longer periods of time and derive their primary income from criminal activity are more likely to launder their profits. The main categories of money launderers include: 1. Organized Crime Groups 2. White Collar Professionals 5
1. Organized Crime Groups In Canada, there are six broad organized crime groups: I. Outlaw Motorcycle Gangs (OMG) II. Eastern European Organized Crime (EEOC) III. Asian Organized Crime (AOC) IV. Traditional Organized Crime (TOC) V. Aboriginal-based Crime Gangs VI. Indo-Canadian Criminal Groups 6
2. White Collar Professionals During the 80s and 90s, it became recognized that large amounts of money generated from non-drug related crimes were a significant portion of the illicit funds laundered each year. Further investigation led to the discovery of two trends: A. Contracted Professionals Criminal organizations contracted professionals to find more complex methods to launder their proceeds of crime. These professionals were able to provide criminals investment advice to clean their money. B. Globalization The globalization and integration of financial markets have allowed professionals to manipulate international markets and banking systems to their advantage to route transactions through other countries that have lax money laundering laws. 7
Part 2: Canadian Money Laundering and Terrorist Financing Control Organizations 8
Fighting Money Laundering and Terrorist Financing in Canada: With a stable financial system, close proximity to the United States, and a moderate judiciary when it comes to sentencing (compared to other countries), Canada has become a hub for laundering money from Canadian criminals and transnational organized crime groups alike. However, Canada s compliance with the FATF s Forty Recommendations, through the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, is making great strides detecting and deterring money laundering and terrorist financing in Canada. There are several Canadian government organizations involved in this fight, including the: 1. Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) 2. Canadian Security Intelligence Service (CSIS) 3. Office of the Superintendent of Financial Institutions (OSFI) 4. Law Enforcement - Federal, Provincial, and Municipal Police forces 5. Canada Border Services Agency (CBSA) 9
1. FINTRAC FINTRAC is Canada's financial intelligence unit (FIU), a specialized agency created to collect, analyze, and disclose financial information and intelligence on suspected money laundering and terrorist financing activities. Created in July 2000, the Centre is an integral part of our country's National Initiative to Combat Money Laundering. Mission: To provide law enforcement and intelligence agencies with financial intelligence on money laundering, terrorist activity financing, and threats to the security of Canada, while ensuring the protection of the information it holds. 10
FINTRAC continued: Mandate: Some of the specific mandates of FINTRAC are to: Receive and collect reports on suspicious and prescribed financial transactions relevant to money laundering and terrorist financing activity; Receive reports on the cross-border movement of large amounts of currency or monetary instruments; Analyze and assess the information it receives; Provide law enforcement and CSIS with intelligence relevant to the investigation or prosecution of money laundering offences and terrorist financing activity offences; and Ensure compliance by financial intermediaries and other reporting entities with their obligations under the Act and its supporting Regulations. 11
2. Canadian Security Intelligence Services (CSIS) Created in 1984, CSIS s mandate is to collect information in Canada and abroad, and to advise government about activities that may constitute a threat to the security of Canada. This includes anyone who advocates the use of violence to further political, religious, or ideological objectives. Counter-terrorism Program: The purpose of this program is to help: ensure that Canada is not a place where people are killed or injured by terrorists; safeguard against acts of terrorism being planned in Canada; to help prevent Canada from being a source of funds or material for terrorist activity; ensure that Canada does not provide a base for terrorists; protect Canadian institutions; and protect Canadians travelling or working abroad. 12
3. Office of the Superintendent of Financial Institutions (OSFI) OSFI is the primary regulator of federally chartered financial institutions and administered pension plans. OSFI s mandate is to safeguard policy holders, depositors, and pension plan members from undue loss by ensuring public confidence in the financial services industry. As part of it s supervisory mandate, OSFI performs regulatory audits on financial institutions, including audits on compliance with the Proceeds of Crime (Money Laundering) Terrorist Financing Act. Information sharing: OSFI and FINTRAC (2004) are permitted to disclose information with one another on the policies and practices used by financial institutions to ensure compliance with the financial transaction record-keeping and reporting obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. 13
4. Law Enforcement The RCMP are responsible to enforce all federal Acts of Parliament, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Although all Canadian police forces can investigate money laundering and terrorist financing offenses, the Royal Canadian Mounted Police (RCMP), in particular its Integrated Proceeds of Crime Initiative (IPOC) Units, and the provincial law enforcement authorities in Ontario (the Ontario Provincial Police) and Québec (Sûreté du Québec) undertake virtually all money laundering and terrorist financing investigations. Integrated Proceeds of Crime Program (IPOC) To coordinate the RCMP s overall efforts to combat money laundering and terrorist financing, the Integrated Proceeds of Crime Program was created. 14
5. Canada Border Services Agency (CBSA) Keeping Canada s border open to travel and trade but closed to crime requires the CBSA to manage border operations effectively. The CBSA delivers a variety of programs and services for people (travellers, settlers, etc.) and for goods (commercial trade). Some programs and services are designed to help travellers and trade enter Canada smoothly, while others are focused on enforcing laws and keeping threats to our safety and health out of Canada. In January 2004, the Government of Canada established the National Risk Assessment Centre (NRAC) to protect Canadians against current and emerging threats. With almost $2 billion daily in cross-border trade with the United States, keeping the trade system open is critical to ensuring Canada s economic prosperity. It is equally critical to protect the border against potential threats to our health, security, and economy. 15
I m done Module 2, what do I do now? Congratulations! You re now ready to move on to Module 3: Reporting Requirements Good Luck! 16