ARCHIVED - Financial Transactions and Reports Analysis Centre of Canada

• Previous Page
• Table of Contents
• Next Page

This page has been archived.

SECTION I - OVERVIEW

Message from the Director

I am pleased to present the Departmental Performance Report for the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for 2007-2008.

During the past year, FINTRAC has worked hard to implement the legislative amendments arising from the December 2006 passage of Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act. Bringing these new legislative initiatives on board required-and is still requiring-a sustained and substantial effort, from adjusting internal operations to handle the increased workload, to assisting reporting entities to conform to new legal provisions, to recalibrating information technology systems to accommodate new reporting requirements.

FINTRAC and its partners have expended considerable effort to date implementing C-25, and the positive effect is evident. The Centre can now provide a more comprehensive range of financial transaction information, allowing for a more valuable intelligence product. These legislative amendments permit, as well, a broader spectrum of financial intelligence recipients, with the Charities Directorate of Canada Revenue Agency, the Canada Border Services Agency and the Communications Security Establishment now authorized-under specified conditions-to receive our intelligence products.

Bill C-25 has strengthened the anti-money laundering and anti-terrorist activity financing compliance regime across Canada, with its increasingly deterrent effect on the entry of criminal money into legitimate channels of finance. In addition, with the amendments, Canada becomes compliant with virtually all the recommendations made last year by the Financial Action Task Force in its third mutual evaluation of the effectiveness of Canada's anti-money laundering/terrorist financing regime. Finally, the legislative requirement for a review, every two years, of the Centre's management of personal information holdings by the Office of the Privacy Commissioner, gives further assurance to Canadians that FINTRAC continues to uphold the highest standards in protecting the information entrusted to it.

Although the implementation of Bill C-25 required a significant commitment of resources, there was no slackening in the Centre's achievements in producing disclosures of financial intelligence. In 2007-08, FINTRAC made 210 case disclosures-compared to 193 in 2006-07 and 168 in 2005-06-to law enforcement, national security agencies, and other domestic authorized recipients, and to foreign financial intelligence units, with which it has an information sharing agreement.

In addition to its contribution of financial intelligence, FINTRAC was active in a global leadership role, especially within The Egmont Group ‑ 108 financial intelligence units from across the world, all responsible for following the money trail in order to counter money laundering and terrorism financing. The Centre was indispensable in establishing the Egmont Secretariat in Toronto, which became operational in October 2007. The outcome is a stronger, more effective international organisation that will bolster the Egmont Group's role in global anti-money laundering and counter-terrorism efforts.

Again in 2007-08, FINTRAC strengthened the advanced automated systems and sophisticated tools that capture, search and analyze data from millions of financial transaction reports. While experienced analysts are the first requisite in producing financial intelligence, these systems and tools are part of the endowment that makes FINTRAC's role, and its contribution, unique. Every advance that the Centre makes in improving its information technology also advances its ability to discover and follow the movements of suspicious money.

As the new Director for FINTRAC, I am pleased to present these results. In 2007-08, the Centre emerged as a mature organization, well equipped to make a strong contribution domestically and globally. I look forward to continuing the Centre's proud record of achievement and to charting its future progress.

Jeanne M. Flemming
Director

Management Representation Statement

I submit for tabling in Parliament, the 2007-2008 Departmental Performance Report for the Financial Transactions and Reports Analysis Centre of Canada.

This document has been prepared based on the reporting principles contained in Guide for the Preparation of Part III of the 2007-2008 Estimates: Reports on Plans and Priorities and Departmental Performance Reports:

It adheres to the specific reporting requirements outlined in the Treasury Board Secretariat guidance;

• It is based on the Centre's Strategic Outcome(s) and Program Activity Architecture that were approved by the Treasury Board;
• It presents consistent, comprehensive, balanced and reliable information;
• It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and
• It reports finances based on approved numbers from the Estimates and the Public Accounts of Canada.

_________________________
Jeanne M. Flemming
Director

Summary Information

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada's financial intelligence unit, was created in 2000. It is an independent agency, reporting to the Minister of Finance, who is accountable to Parliament for the activities of the Centre. FINTRAC provides financial intelligence to police and intelligence agencies and other appropriate authorities, domestically and internationally, in order to support investigations and prosecutions of money laundering, terrorist activity financing and other threats to the security of Canada. FINTRAC operates at arm's length from the domestic and international organizations to which it provides intelligence.

FINTRAC's single program activity–the collection, analysis and dissemination of financial information–is an expression of its mandate. This program activity contributes directly to the government's “tackling crime” priority by detecting and deterring money laundering and the financing of terrorist activity. It also helps to create an environment in which it is more difficult for criminals to benefit financially from illicit activity.

FINTRAC's enabling legislation is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

Financial Resources ($ millions)

2007-2008
Planned Spending	Total Authorities	Actual Spending
$55.4	$52.8	$51.1

Human Resources

2007-2008
Planned	Actual	Difference
271 FTEs	319 FTEs	48 FTEs

Departmental Priorities

	2007-2008
Status on Performance	Planned Spending ($ millions)	Actual Spending ($ millions)
Strategic Outcome: Financial intelligence that contributes to the detection and deterrence of money laundering and terrorist activity financing in Canada and abroad.
Alignment with Government of Canada Outcomes: FINTRAC's program activity is aligned with three government-wide outcomes, namely: a fair and secure marketplace-FINTRAC contributes to the security and integrity of Canada's financial system; safe and secure communities-FINTRAC contributes by creating an environment in which it is more difficult to engage in criminal activities; and a safe and secure world through international cooperation-FINTRAC maintains operational partnerships with foreign financial intelligence units for the purpose of information sharing to combat money laundering, terrorist activity financing and other threats to the security of Canada.

 

Priority (type)	Program Activity – Expected Result	Performance Status	Planned Spending	Actual Spending
Deliver timely and high quality financial intelligence to law enforcement and national security agencies, and foreign financial intelligence units. (ongoing)	Financial intelligence analysis, and case disclosures that are widely accepted and used in investigations by law enforcement, CSIS and foreign financial intelligence units	Successfully met	$33.9	$31.2
Ensure compliance with the PCMLTFA. (ongoing)	Increased compliance with the law by reporting entities through continued collaboration and education, as well as through more robust detection and deterrence of non-compliance. This will be accomplished through a risk-based compliance program comprised of awareness activities, monitoring of data quality, compliance questionnaires, examinations, and by taking appropriate remedial action when non-compliance is detected.	Successfully met	$16.2	$15.0
Disseminate strategic information on money laundering and terrorist activity financing to partners, stakeholders, and the general public (ongoing)	Provide strategic intelligence, advice and analysis that enhance awareness and understanding of money laundering and terrorist activity financing and inform the development of effective Canadian and multilateral counter-strategies.	Successfully met	$5.3	$4.9

Overall Departmental Performance

FINTRAC's Operating Environment

Money laundering is the process by which money generated by criminal activities, such as the sale and distribution of illicit drugs, fraud, human smuggling and extortion, is converted into assets that cannot easily be traced back to their illegal origins. Money laundering is a global phenomenon, and the techniques used are numerous and can be very sophisticated. Technological advances in e-commerce, the global diversification of financial markets and new financial product developments provide further opportunities to launder illegal profit and obscure the money trail leading back to the underlying crime.

Terrorist activity financing is the process by which money is channelled, through a variety of means, to support the activities of terrorist organizations and networks which threaten the safety and security of Canadians at home and abroad. While terrorist groups do generate funds from criminal activities such as drug trafficking and arms smuggling, they may also obtain revenue through legal means. In addition, some charity or relief organizations may unwittingly become the conduit through which donors contribute funds that may eventually be used to commit a terrorist act. The funds are then routed to the recipient terrorist organizations through both informal networks and the formal financial system.

FINTRAC is an essential component of the community of organizations that combat organized crime and terrorism under Canada's anti-money laundering and anti-terrorist financing (AML/ATF) regime.

FINTRAC facilitates the investigation and prosecution of money laundering, terrorist activity financing and other threats to the security of Canada by receiving information on financial transactions, analyzing it, and disclosing the resulting financial intelligence to the appropriate police force or to other entities legislatively entitled to receive FINTRAC's disclosures, such as the Canadian Security Intelligence Service (CSIS), the Canada Revenue Agency (CRA), the Canada Border Services Agency (CBSA), Communications Security Establishment (CSE) and foreign financial intelligence units.

By ensuring compliance by financial institutions and other reporting entities with their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the Centre helps to create an effective deterrent to those who would use legitimate financial channels to launder money or to finance terrorism. In Canada, banks and other financial services businesses maintain internal compliance regimes that facilitate following the trail of financial transactions, and that law enforcement agencies can effectively pursue cases of suspected money laundering and terrorist activity financing.

Money laundering and terrorist activity financing are transnational in nature, necessitating the participation of all countries for their successful detection and deterrence. FINTRAC's work with international bodies, such as the Egmont Group and the Financial Action Task Force (FATF), makes a strong contribution on Canada's behalf toward developing and adopting new international anti‑money laundering and anti-terrorist activity financing standards. The operational links the Centre has forged with other financial intelligence units throughout the world are a vital part of Canada's contribution to the international fight against terrorism, money laundering and transnational organized crime.

Bill C-25 and the PCMLTFA

Bill C-25, which received Royal Assent on December 14, 2006, amended the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The amended legislation and related regulations are strengthening deterrence provisions and broadening the range of information included in case disclosures to law enforcement, national security agencies, other federal departments, and foreign FIUs.

HIGHLIGHTS

The amendments to the PCMLTFA and its regulations that took effect in 2007 have resulted in the following enhancements when there are reasonable grounds to suspect that the information would be relevant to the investigation or the prosecution of a money laundering or a terrorist activity financing offence:

• allowing FINTRAC to disclose additional information to law enforcement agencies and other recipients
• authorizing the disclosure of relevant information to the Communications Security Establishment
• authorizing the disclosure of relevant information to the Charities Directorate of the Canada Revenue Agency (CRA) regarding a charity's eligibility for registration
• authorizing the disclosure to CRA of information relating to an offence of obtaining or attempting to obtain a rebate, refund or credit to which a person or entity is not entitled
• authorizing the disclosure to the Canada Border Services Agency of information relating to an offence of smuggling or attempting to smuggle goods subject to duties, or an offence related to the importation of goods that are controlled or prohibited or regulated
• enabling FINTRAC to exchange compliance-related information with its foreign counterparts
• providing for a review every two years by the Office of the Privacy Commissioner of Canada of the measures taken by FINTRAC to protect the information it receives or collects.

FINTRAC's Organizational Context

Overview

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is a partner in Canada's anti-money laundering and anti-terrorist activity financing regime. The Centre's main objective is to assist in the detection, prevention and deterrence of money laundering, the financing of terrorist activities and other threats to the security of Canada.

Mission

FINTRAC's mission is to provide law enforcement and intelligence agencies with high quality financial intelligence on money laundering, terrorist activity financing and other threats to the security of Canada, while protecting the personal information under its control.

Mandate

FINTRAC was created to detect, prevent and deter money laundering and the financing of terrorist activities and other threats to the security of Canada, to facilitate the investigation and prosecution of these offences by law enforcement and national security partners.

Activities

FINTRAC's activities include:

• Receiving reports on suspicious and prescribed financial transactions, and receiving and collecting information relevant to money laundering and terrorist activity financing;
• Receiving reports on the cross-border movement of large amounts of currency or monetary instruments;
• Analyzing and assessing the information it receives and collects;
• Providing domestic law enforcement with financial intelligence that it suspects would be relevant to the investigation or prosecution of money laundering and terrorist activity financing offences;
• Providing the same information to the Canada Revenue Agency (CRA), if the Centre also determines that the information is relevant to an offence of evading or attempting to evade paying federal taxes or duties imposed under an Act of Parliament administered by the Minister of National Revenue; or to CRA Charities Directorate, when it is determined that the information is relevant to a decision concerning the registration of a charity.
• Providing information to the Canada Border Services Agency (CBSA) if the Centre determines that the information is relevant to an offence of evading or attempting to evade paying taxes or duties imposed under an Act of Parliament administered by the CBSA; to determining whether a person is a person described in sections 34 to 42 of the Immigration and Refugee Protection Act or is relevant to an offence under any of sections 117 to 119, 126 or 127 of that Act; or to investigating or prosecuting an offence of smuggling or attempting to smuggle goods subject to duties or an offence related to the importation of goods that are prohibited, controlled or regulated under the Customs Act or under any other Act of Parliament.
• Providing CSIS with financial intelligence that it suspects would be relevant to threats to the security of Canada (including suspected terrorist activity financing);
• Providing the Communications Security Establishment (CSE) with financial intelligence that it suspects would be relevant to that agency's mandate;
• Providing financial intelligence to foreign financial intelligence units with which it has concluded a memorandum of understanding providing for the exchange of such information, and exchange compliance-related information with these FIUs;
• Ensuring compliance by financial institutions and other reporting entities with their obligations under the PCMLTFA and regulations;
• Ensuring that personal information under its control is protected from unauthorized disclosure;
• Providing strategic intelligence, advice and analysis that enhance awareness and understanding of money laundering and terrorist activity financing, and that inform the development of effective Canadian and multilateral counter-strategies;
• Enhancing public awareness and understanding of matters related to money laundering.

Figure 1: FINTRAC's Program Activity Architecture¹

¹FINTRAC's PAA was modified in 2007. For reporting purposes and in accordance with TBS' guidance, the PAA presented here is the PAA predating this change as it appears in FINTRAC's 2007-2008 Report On Plans And Priorities

In compliance with the Treasury Board Secretariat's guidance, FINTRAC is using the PAA structure presented in its 2007-2008 Report on Plans and Priorities. However, in 2007, changes were made to FINTRAC's Program Activity Architecture (PAA). These changes result from the implementation of Treasury Board Secretariat's Management, Resources and Results Structure (MRRS) Policy. FINTRAC's Strategic Outcome and Program Activity descriptions have not been modified. Activities that were previously identified as sub-activities are now included in the single program activity Collection, Analysis and Dissemination of Financial Information. The use of resources dedicated to Corporate Support, along with the results achieved for 2007-2008, are now reported in Section IV of the DPR, under "Other Items of Interest".

Summary of Departmental Performance

The following sections focus on the specific priorities outlined in the 2007-2008 Report on Plans and Priorities (RPP) for the period under review.

The Year in Review

The 2007-2008 fiscal year was a period of great transition for FINTRAC. In November 2007, the first Director of FINTRAC retired after leading the Centre  from its inception in 2000. In March 2008, FINTRAC welcomed its new Director.

In 2007-2008, FINTRAC also undertook the work to prepare for the coming into force of major legislative changes resulting from the December 2006 adoption of Bill C-25. FINTRAC dedicated a newly created sector to the development of these initiatives, to coordinate the efforts and the resources required to deliver these changes. This sector received the mandate to develop and prepare the implementation of the Bill C-25 initiatives, including the development of the money services businesses (MSB) registry and of the administrative monetary penalties program. It also worked to facilitate FINTRAC's activities in relation to new sectors with reporting obligations, and in relation to the expansion of reporting obligations for some of the sectors that already had reporting obligations prior to Bill C-25.

The development of the registration program for money services businesses was a major undertaking for FINTRAC in 2007-2008. The coming into force date of the requirement for all Canadian MSBs to register with FINTRAC was June 23, 2008. Through 2007-2008, FINTRAC dedicated significant resources to develop the IT solution necessary to establish the MSB registry. As well, the development of the tools necessary for a successful implementation of the registry involved most areas within the Centre, including communications (Web site interface, guidelines, and users' guides), regional operations and compliance (outreach, surveys) and policy/program development (outreach, as well as legislative and regulatory clarifications). The involvement of many stakeholders from the private sector has made the development of the MSB registry possible.

In 2007-2008, FINTRAC made 210 case disclosures of financial intelligence to law enforcement and national security agencies, and to counterpart foreign financial intelligence units. Again this year, 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.

The number of cases disclosed to its partners remains a strong indicator of FINTRAC's ability to analyze the information it receives to identify suspected money laundering, terrorist financing or possible threats to the security of Canada. The benefit for Canadians lies in the contribution that these case disclosures make to the investigations and prosecutions of individuals and entities involved in the criminal activities targeted by the disclosures. FINTRAC's Annual Report, available at www.fintrac-canafe.gc.ca, offers additional perspective on the contribution and benefits from FINTRAC's disclosure products, and their value to the Centre's partners.

Insight into suspicious activities depends on the availability of complete, accurate and timely financial transaction reports that are provided to FINTRAC by entities with reporting obligations. In 2007-2008, the Centre continued to strengthen its national compliance program through a wide range of initiatives. Outreach activities, including presentations and seminars, have been and continue to be, important vehicles for engaging and raising awareness among reporting entities. FINTRAC, together with national and provincial regulators, conducted an increased number of compliance examinations across all reporting sectors.

Internationally, FINTRAC continues to demonstrate its strong commitment to sustaining and broadening the cooperative ties that are so important in the global effort to fight money laundering and terrorist activity financing. This has helped establish Canada as a major player in global crime-fighting efforts, a position which was further confirmed on February 15, 2008 when the Egmont Group's Secretariat was officially inaugurated in Toronto.

FINTRAC's international role underlines its commitment to uphold and strengthen the global network to fight money laundering and terrorist activity financing. In 2007-2008, the Centre signed two more memoranda of understanding (MOU) with foreign financial intelligence units (FIUs), bringing the total number, as of March 31, 2008, to 47. The coming into force of legislative changes brought forth by Bill C-25 now allows FINTRAC to exchange compliance information with foreign FIUs and regulatory authorities, when the appropriate MOU are in place.

In 2007-2008, Canada underwent an evaluation by the Financial Action Task Force (FATF) to assess the effectiveness of its anti-money laundering and anti‑terrorist financing regime in applying the FATF's 40+9 Recommendations. In this assessment, Canada's legal system, law enforcement powers, international cooperation and measures to combat terrorist financing were all rated highly. Regulatory changes that were introduced after the FATF evaluation further contribute to bringing the Canadian AML/ATF regime, and thus FINTRAC, in compliance with FATF standards.

FINTRAC continued to strengthen its strategic intelligence capacity in support of its tactical intelligence and compliance programs. In addition to sharing strategic intelligence with domestic and international partners, FINTRAC produced new feedback products aimed at reporting entities and enhanced automated solutions to assist in the production of operational statistics and management information.

The Centre's enabling legislation was developed to ensure the highest level of protection for personal information, while also making it possible for certain information to be disclosed to law enforcement and to intelligence agencies. A key provision of the PCMLTFA is the requirement for the Office of the Privacy Commissioner (OPC) to review FINTRAC's measures to protect information. In 2007‑2008, the OPC initiated its first review, conducted under the Commissioner's legislated mandate to review and report on FINTRAC's activities every two years.

In 2007, FINTRAC also completed the Treasury Board-mandated Strategic Review exercise. This exercise was aimed at identifying areas where resources can be streamlined in order to attain the best value for money.

Key Results for 2007-2008 by Priority

In FINTRAC's 2007-2008 Report on Plans and Priorities (RPP), the Centre outlined the results it hoped to achieve for its program activity, Collection, Analysis and Dissemination of Financial Information, according to its three main priorities.

PRIORITY: Deliver timely and high quality financial intelligence to law enforcement and national security agencies, and foreign financial intelligence units.

Anticipated Result: Financial intelligence analysis, and case disclosures that are widely accepted and used in investigations by law enforcement, CSIS and foreign financial intelligence units. Successfully met: FINTRAC's record number of case disclosures was higher both in the number of cases, and in the complexity of networks revealed. The Centre's financial intelligence made a relevant and meaningful contribution to the fight against money laundering and terrorist activity financing.

The production and disclosure of timely and relevant financial intelligence is central to the achievement of the Centre's strategic outcome. It is of the utmost importance that tactical intelligence produced by the Centre enhances the capacity of law enforcement, national security agencies and foreign financial intelligence units to detect and deter money laundering, terrorist activity financing and other threats to the security of Canada.

Once again in 2007-2008, FINTRAC was able to produce more case disclosures than in previous years. During that period, the Centre made 210 case disclosures, of which 171 were associated with money laundering, 29 with terrorist financing and other threats to Canada's safety and security, and 10 with associations to both money laundering and terrorist financing.

FINTRAC's disclosures are assembled from a number of financial transactions. In 2007-2008, the average cases disclosed contained 323 transactions; the largest case disclosed included over 7000 transactions. These transactions are shared with law enforcement or security agencies as part of a FINTRAC case disclosure once the Centre has met the legal threshold set out in the PCMLTFA, and can serve as intelligence to help develop leads that law enforcement or agencies that investigate terrorist financing could use to further their investigations.

The legislative changes introduced by Bill C-25 have expanded the scope of the information that can be included in FINTRAC's case disclosures. This new designated information now allows the Centre to provide its partners with even more comprehensive financial intelligence that is increasingly helpful in initiating and supporting investigations.

Of the 210 disclosures, over 60 per cent were destined to the RCMP, with the others being sent to municipal and provincial police forces, foreign FIUs, as well as to CSIS, the CBSA and the CRA. The feedback received from law enforcement and other partners provides a clear indication of the impact of the Centre's financial intelligence. 84 percent of the feedback received on disclosures mentioned that the information related to persons, businesses or entities of interest to the disclosure recipient. It shows that the disclosures not only feed into investigations and prosecutions that are already underway, but also that, in 64 per cent of the feedback received, they identify completely new cases of suspected money laundering or terrorist activity financing.

Investigations often focus on a small cluster of entities or individuals, and linking these people to players in other networks is usually challenging. FINTRAC disclosures often support this aspect of its partners' work: case disclosures help identify additional persons or entities involved in criminal activities, even in cases where the disclosure feeds into an investigation already underway. In 2007-2008, new entities or individuals were identified in 84 per cent of the total number of cases that were generated by a voluntary information record (VIR) or by an MOU-authorized query from a foreign financial intelligence unit:

• 68 per cent of cases disclosed identified 1 to 5 new entities/individuals
• 21 per cent of cases disclosed identified 6 to 10 new entities/individuals
• 11 per cent of cases disclosed identified more than 11 new entities/individuals.

FINTRAC's disclosures also help law enforcement to build stronger cases and gather more convincing information on suspected criminal activities. In the fall 2007, the Centre completed a study of feedback received from law enforcement on over 120 FINTRAC disclosures. This feedback revealed that 39 per cent of FINTRAC disclosures were used by law enforcement in judicial applications to seize proceeds of crime, or in affidavits prepared for search warrants seeking evidence for ongoing investigations.

FINTRAC's automated methodology is also leading to more disclosures that identify suspicious patterns of financial transactions. The Centre has developed automated rules to search its database to identify such suspicious patterns; these patterns, in turn, lead to the development of cases and associated disclosures to law enforcement or other partners. In some instances, no other method had succeeded in identifying the subjects of these disclosures, and they had been conducting suspicious activities without being detected by law enforcement authorities. In 2007-2008, FINTRAC's work in this field had enabled five such disclosures.

FINTRAC's partners have played an indispensable role in these successes. Canadian financial institutions and other financial intermediaries are becoming increasingly effective in detecting suspicious transactions. The number of suspicious transaction reports (STRs) received by FINTRAC has increased dramatically, from 39,036 in 2006-2007 to this year's total of 50,858. STRs are used in over 74 per cent of FINTRAC's disclosures, and play a major role in the development of financial intelligence.

Domestically, FINTRAC became involved in the Canada's National Anti-Drug Strategy. The Centre's drug-related financial intelligence helps law enforcement in identifying and targeting organized crime involved in the distribution of illegal drugs.

In 2007-2008, FINTRAC made 50 case disclosures to foreign FIUs with which it has an MOU, an increase of 43 per cent from 2006-2007. In instances where information was disclosed in response to a query from one of its international counterparts, FINTRAC also sought their permission to disclose this information to relevant partners. In a world with burgeoning global economy, this type of collaboration is crucial to the effectiveness of financial intelligence units.

FINTRAC's position on the international scene continued to be an enviable one. In 2007‑2008, the inauguration of the Egmont Group's permanent secretariat in Toronto has confirmed Canada's role as a leader in the transnational fight against money laundering and terrorist financing.

PRIORITY: Ensure compliance with the PCMLTFA

Anticipated Result: Increased compliance with the law by reporting entities through more robust detection and deterrence of non-compliance. This will be accomplished through a risk-based compliance program comprised of awareness activities, the monitoring of data quality, compliance questionnaires, examinations, and by taking appropriate remedial action when non‑compliance is detected. Successfully met: FINTRAC continued to build and refine its national compliance program. An increased number of compliance examinations were conducted in all reporting sectors. FINTRAC's compliance team also conducted a substantial number of presentations, meetings and seminars for reporting entities, industry associations, regulators and law enforcement agencies.

The quality of FINTRAC's financial intelligence is directly related to the quality and quantity of reports the Centre receives from reporting entities. As part of FINTRAC's Collection, Analysis and Dissemination of Financial Information program activity, the Centre's compliance program seeks to promote and facilitate compliance with the law by reporting entities and to detect and deter non-compliance. This not only has the effect of improving the quality and quantity of reports received by FINTRAC, it also has a strong deterrent effect, as it makes it more difficult for those who would launder money or seek to raise funds for terrorist activity to carry out their activities unnoticed. In addition to the deterrent effect they provide, compliance activities can directly assist investigations and prosecutions; for example, when financial institutions request identification from clients, this information can be made available to law enforcement and to prosecutors. This additional scrutiny upfront greatly increases deterrence.

FINTRAC is enhancing its detection and deterrence capacity as a result of the passage of Bill C-25 and related regulations. These include the creation of a registration system for money services businesses, the establishment of an administrative monetary penalties regime, enhanced customer due diligence measures and the addition of new sectors with record-keeping and/or reporting obligations.

Over the past year, FINTRAC employed a number of tools and approaches in its efforts to inform reporting entities and to assist them in meeting their obligations. These efforts included:

• Conducting more than 370 presentations, meetings and seminars with existing reporting entities and associations reaching over 18,335 people;
• Providing 24 separate information sessions to reporting entities in 10 cities on the new PCMLTFA obligations, reaching more than 2,400 people;
• Responding to over 3,920 call centre enquiries from reporting entities;
• Targeted communications to industry groups directly affected by legislative changes, including guidelines and industry-specific information sheets, which were distributed to seven different business sectors.

In addition to the above, FINTRAC also modified its toll free service ─already available to reporting entities ─to provide them with direct and timely access to the Centre's regional compliance officers for information on questions they might have about complying with the law.

This year, FINTRAC received over 21,626,000 reports from all reporting sectors. The financial transaction reports received from reporting entities are now fully monitored for data quality, and procedures are being developed to monitor timing and volume. As a result of these enhancements, the number of reports returned for correction increased by 21 per cent.

The use of compliance questionnaires is an important tool to assess and increase compliance. This year, the Centre sent over 6,000 questionnaires to reporting entities in the real estate, money services businesses, credit unions, securities, life insurance and accounting sectors. Recent legislative amendments now make it compulsory for reporting entities to complete these questionnaires and return them to FINTRAC.

FINTRAC also sought to refine its risk model by deepening its collaboration with international partners such as Australia, the UK and the US, to share best practices in compliance, and especially, those related to risk assessment. FINTRAC also worked with Statistics Canada on a project to enhance the Centre's risk assessment model.

This year, FINTRAC performed 277 on-site examinations. FINTRAC's MOU partners ─ regulators in various sectors with which FINTRAC has signed an agreement for the sharing of compliance-related information ─ conducted a further 257 examinations, which helped to lessen the regulatory burden placed on reporting entities by limiting duplication of the examinations performed.

FINTRAC's examination process has demonstrated that the vast majority of reporting entities want to comply with their legislative obligations. In all of its examinations, FINTRAC has found only a small number of reporting entities with serious compliance deficiencies. In such cases, FINTRAC can choose to disclose non-compliance to law enforcement for investigation and prosecution. In 2007-2008, five such non-compliance disclosures were made to law enforcement. This is in contrast to the total of seven non‑compliance disclosures that had been made in the three previous fiscal years.

FINTRAC's International Technical Assistance Program (ITAP) is an important component of the Centre's work to foster and support different aspects of compliance and financial intelligence analysis on the international scene. In 2007-2008, FINTRAC held pilot sessions of its new International Compliance Program (ICP) attended by six individuals from the St-Vincent and the Grenadines Anti-Money Laundering and Counter-Terrorist Financing Regime organization.

As well, FINTRAC conducted pilot sessions of its recently developed Financial Intelligence Analysis Course (FIAC), which was attended by nine individuals from financial intelligence units of St. Kitts & Nevis, St. Vincent & the Grenadines and

St. Lucia. The feedback received from the participants confirmed the quality of the program and emphasized the value of the training programs in setting practices that can be adopted internationally.

PRIORITY: Disseminate strategic information on money laundering and terrorist activity financing to partners, stakeholders, and the general public.

Anticipated Result: Provide strategic intelligence, advice and analysis that enhance awareness and understanding of money laundering and terrorist activity financing and inform the development of effective Canadian and multilateral counter-strategies. Successfully met: Through macro-analysis of its case disclosures and the sharing of strategic information, FINTRAC supported the work of policy-makers, domestic partners in law enforcement and national security. FINTRAC also supported Canada's commitments on the international front, with partners such as the Egmont Group and the FATF, strengthening relationships important in the global effort to fight money laundering and terrorist activity financing.

FINTRAC has a legislated mandate to enhance public awareness and understanding of matters related to money laundering, most specifically with reporting entities covered by the PCMLTFA. To raise awareness of money laundering and terrorist activity financing and help alert Canadians to the threat posed by these activities, FINTRAC undertakes a number of activities including:

• Publishing and disseminating an Annual Report to Parliament;
• Publishing articles in trade journals and newsletters;
• Publishing pamphlets and other printed material for distribution to reporting entities and their clients; and
• Operating a Web site and a call centre to provide information to reporting entities and the public.

FINTRAC's Web site was modified to comply with cross-government standards, which improved its ability to provide more streamlined, diverse and interactive materials. The site was a frequently used source of information for reporting entities and the general public.

The Web site is particularly useful for reporting entities, providing them with valuable tools and information. The Centre made several enhancements to the site's contents, such as making a series of publications available to provide feedback to specific reporting entity sectors on transaction reports submitted to the Centre. Sanitized money laundering cases were also posted to illustrate how reported data allows FINTRAC to connect suspicious money movements, thus contributing to eventual case disclosures.

In 2007-08, FINTRAC produced and disseminated a wide range of well-received strategic analysis products to its partners. Among these were "The Watch", an environmental scan focused on money laundering and terrorist activity financing issues; "Backgrounders", which present a general overview of emerging trends and typologies; and financial intelligence "Briefs" which provide a more in-depth assessment of our reports and disclosures. As in the past, "Perspectives" were also produced to offer a retrospective of the Centre's disclosures and reports, and to identify typologies and patterns of transactions in relation to a particular subject or theme.

In 2007-2008, the Centre met requests for high-level analyses from various agencies, and its employees testified before the Commission of Inquiry into the Investigation of the Bombing of Air India Flight 182.

FINTRAC contributed to the provision of feedback to several reporting sectors, notably by offering over 25 feedback presentations to various reporting sectors such as financial institutions, casinos, accountants, money services businesses and foreign exchange dealers, real estate, securities and life insurance. Feedback reports about the value of reporting from the real estate and securities sectors were also posted on FINTRAC's Web site to highlight how valuable the contribution made by these sectors to the anti-money laundering and anti-terrorist activity financing regime has become.

FINTRAC continued to engage with its international counterparts in various forums aimed at promoting the development and dissemination of strategic intelligence. In 2007‑2008, this led to FINTRAC's contribution to various FATF typologies exercises-notably a project on Proliferation Financing, led jointly by Canada and Denmark.

In 2007-2008, FINTRAC also made progress on its mandate to disseminate information to the general public. A FINTRAC video, entitled "The Case" was produced, and was first launched at presentation sessions held for reporting entities in 2007. The video presents a FINTRAC sanitized case; using the analysis of suspicious transaction reports and information submitted by law enforcement, it focuses on how FINTRAC was able to follow the money trail, linking seven individuals and four businesses in a suspected criminal network involving 800 individual transactions worth more than $12 million.

• Previous Page
• Table of Contents
• Next Page