UP 2,245%

In Canada, any person or entity responsible for moving money around has obligations to help combat money laundering and the financing of terrorist activity. Those obligations are spelled out under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Many of our financial institutions, cheque cashing, money wiring, and currency converter businesses, securities dealers, and real estate firms simply fail to meet those requirements. Many notaries, casinos, dealers in precious metals and stones, as well as life insurance companies are in the same boat. And all these folks together conspire such that our wee nation is responsible for laundering perhaps (though there is no good estimation) something on the order of $147 billion annually.

A recent report from FinTRAC, Canada's Financial Transactions and Reports Analysis Centre, showed 11 of Canada’s regulated banks had nonexistent or incomplete policies or procedures to combat money laundering. Royal Bank of Canada was recently hit with a $7.4 million penalty on these grounds, for failing to disclose suspicious transaction reports. CIBC was fined $1.3 million for the same. In principle, we all know these fines amount to little more than a rounding error for these businesses, two of the country's biggest banks, and could not possibly act as a deterrent of any kind for this behaviour. And this is confirmed in practice as FinTRAC reports penalties for violations of anti-money laundering laws are up 100% over the previous year. However, the situation is far worse than this as violations merely reference the number of instances. The severity of those violations and, as a result, the penalties paid are up very significantly. “The total amount of these violations was $26,115,999.50, an increase of more than 2,245% from last year,” the agency explains. 

In addition to banks, 84% of the money-service businesses that FinTRAC recently looked into were in the same position, with no or limited capacity to conduct proper risk assessment and determine if a business or personal client had links to organized crime. 87% of securities dealers, who should be helping prevent insider trading, capital market fraud, investment misrepresentation and such, were similarly deficient to Canada’s banks and money lenders according to the FinTrac report.

Just as bad, as you can imagine, were real estate firms. Back in 2019 an expert analysis on money laundering in BC suggested that of the $7.4 billion laundered annually in BC, almost $6 billion of that was likely to come from real estate alone. You'd think such reports would put folks on notice, kinda, maybe. And yet, five years later, FinTRAC tells us 86% of real estate firms they investigated failed to meet their anti-money laundering policy and procedure obligations. 93% of those had incomplete or absent record keeping, 85% failed to meet risk assessment requirements, 52% had insufficient training, and 45% also did not meet client identification requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

What are we doing, people?