ARCHIVED - Financial Transactions and Reports Analysis Centre of Canada - Report

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Section II: Analysis of Program Activities by Strategic Outcome

Strategic Outcome

FINTRAC's detection and deterrence of money laundering and terrorist financing contributes to the public safety of Canadians and helps protect the integrity of Canada's financial system.

Program Activity: Detection and Deterrence of Money Laundering and Terrorist Financing

Program Activity Description

Within this program activity, FINTRAC undertakes activities related to the collection of financial information and the production and dissemination of financial intelligence. In addition, the Centre undertakes activities to ensure compliance by reporting entities with their obligations under Part I of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

2010-11 Financial Resources ($ millions)

Planned Spending	Total Authorities	Actual Spending
42.3	48.0	42.1

2010-11 Human Resources (FTEs)

Planned	Actual	Difference
268	261	(7)

Expected Results	Performance Indicators	Targets	Performance Status
Law enforcement, intelligence agencies and prosecutors received timely and relevant tactical and strategic financial intelligence useful for further actions in investigations and other actions.	Satisfaction expressed by law enforcement and security agencies with the usefulness of case disclosures and strategic information products.	On feedback forms, recipients of information rate the information as useful and timely.	In 2010-11, FINTRAC disclosed 777 cases of suspected money laundering, terrorist financing and threats to the security of Canada to law enforcement and security partners. In addition, the average timeliness of case analysis improved by 18% decreasing from 68 days to 56 days. This achievement was largely due to the work of FINTRAC's analytical team, coupled with more streamlined business processes and the continuous upgrading and enhancement of the Centre's technology. In response to demand from the Canadian security and intelligence community, FINTRAC continued to publish a number of classified Financial Intelligence Assessments and Briefs which involved an extensive review of cases and reports associated with countries of concern and/or terrorist groups of interest. FINTRAC also contributed to a number of security and intelligence community papers that served to inform senior government officials on a range of relevant subjects.
Reporting entities are in compliance with the PCMLTFA and related regulations.	Level of compliance by reporting entities with the PCMLTFA.	High level of compliance.	In 2010-11, examinations continued to be a primary method of compliance assessment for FINTRAC to ensure that reporting entities are complying with their obligations under anti-money laundering and anti-terrorist financing legislation. Over the past year, FINTRAC has implemented a number of enhancements to the Centre's current examination plan. The aim was to enhance compliance efforts in the higher risk sectors. During the year, the Centre completed 684 examinations of which 376 (55%) were onsite examinations and 308 (45%) were desk examinations. The Administrative Monetary Penalties (AMP) program continued to encourage change in non-compliant behaviour. In its second year of implementation, an additional eight AMPs have been publicly named on the FINTRAC Web site, and one non-compliance disclosure was submitted to law enforcement.

Performance Summary and Analysis of Program Activity

Detection of Money Laundering and Terrorist Financing

In 2010-11 FINTRAC increased its production of case disclosures of financial intelligence. During the period, the Centre made 777 case disclosures, of which 626 were associated with money laundering, 103 with terrorist financing and other threats to the security of Canada, and 48 with associations to both money laundering and terrorist financing. The number of case disclosures is a substantial increase compared to the 579 cases disclosed in 2009-10 and the 556 cases disclosed in 2008-09.

FINTRAC’s disclosures are an important source of intelligence that assist in investigations of cases of suspected money laundering and terrorist financing. During the year, FINTRAC experienced a sharp increase in the number of voluntary information records (VIRs) received from law enforcement and intelligence partners. VIRs are used by the Centre’s investigative partners to signal priority investigations where financial intelligence could make an important contribution. In 2010-11, FINTRAC received a total of 1186 VIRs and the total received from law enforcement and intelligence partners increased by over 38%.

The Centre also continued to make improvements to its analytical processes and realigned internal processes and operating structure to better understand and respond to the needs of investigative and intelligence partners.  These enhancements have allowed FINTRAC analysts to focus on the cases of highest importance as well as improve the timeliness of case disclosures. In 2010-11, the average time to complete the analysis of a case improved to 56 days. This was a substantial improvement from 68 days in 2009-10 and 82 days in 2008-09.  In addition, FINTRAC continued to improve its detection and selection of proactive cases where no known current investigations may be occurring.

FINTRAC achieved these results while continuing to receive positive feedback from law enforcement and security partners on the usefulness, relevance and timeliness of case disclosures.

FINTRAC also continued to enhance its production of strategic financial intelligence in keeping with its strategic priorities. Strategic financial intelligence is the end product of an extensive analytical process that takes financial information, combines it with context drawn from open source information and other forms of intelligence, to produce a deeper understanding of the various activities, behaviours and environments associated with money laundering and terrorist financing.

Using the Centre’s sophisticated research tools and technologies, FINTRAC’s strategic intelligence analysts are increasingly able to understand and contextualize the financial behaviour of entities and countries of concern. The resulting products support public understanding, and domestic and international efforts by law enforcement, intelligence agencies, policy makers, as well as FINTRAC’s tactical and compliance analysts.

In 2010-11, FINTRAC disseminated a number of classified strategic intelligence assessments and briefs to domestic and international government partners. These documents, based on extensive reviews of case disclosures and reports, deal with sensitive issues, including specific risks and threats that may undermine the Canadian and international financial systems.

During the year, the Centre also produced the third report in FINTRAC’s Typologies and Trends Report series entitled Money Laundering and Terrorist Financing Trends in Canadian Money Services Businesses (MSBs). This document was published in July 2010 to better enable MSBs and other reporting entities and partners to recognize and combat money laundering and terrorist financing more effectively.

Ensuring Compliance by Reporting Entities

FINTRAC’s compliance program works with reporting entities and other key stakeholders to make Canada's financial system stronger and more resistant to those that would abuse it to launder money or carry out terrorist activity financing. The Centre’s objectives are to ensure that reporting entities are complying with obligations under AML/ATF legislation, and to improve the quality and quantity of report data the Centre receives to support the production of case disclosures of financial intelligence and strategic analysis.

FINTRAC’s risk-based compliance program employs a stratification framework to tailor its compliance activities in accordance with assessed risks. As part of this framework, the Centre assesses risk by evaluating both the likelihood of non-compliance within a given sector, as well as the potential impact or harm of any non-compliance. FINTRAC uses this risk assessment to establish compliance priorities.

In 2010-11, FINTRAC employed a strategy that placed increased emphasis on compliance enforcement interventions. As such, examinations were the primary method of compliance assessment for the Centre that ensured reporting entities were complying with their anti-money laundering and anti-terrorist financing obligations. FINTRAC completed a total of 684 examinations of reporting entities during 2010-11. During the year, the Centre conducted 376 (55%) onsite examinations, and 308 (45%) desk examinations of businesses and individuals within the financial services, securities and money services businesses sectors.

Outreach activities to reporting entities continued in a more focussed and targeted manner. A key highlight during the year was the November 2010 workshop hosted by FINTRAC in Montreal with the theme "Establishing the Links." This workshop built on the success of a similar event held in Toronto in 2009 and was attended by over 100 representatives from the banking, credit union/caisse populaire, insurance, securities and MSB sectors in Quebec and eastern Canada. Presenters from FINTRAC, the RCMP, the Sûreté du Québec and the Public Prosecution Service of Canada spoke to the importance of suspicious transaction reporting, and to the unique contribution of financial intelligence in supporting investigations and prosecutions.

The Administrative Monetary Penalties (AMP) program continued to encourage change in non-compliant behaviour. In its second year of implementation, an additional eight reporting entities were publicly named on the FINTRAC Web site, after having been issued a Notice of Violation, bringing the total number to 15 listed names. In addition, one Non-Compliance Disclosure (NCD) was submitted to law enforcement during the year, bringing the total number to 35 NCDs issued to date.

FINTRAC’s MSB registry continued to allow the general public the opportunity to search for publicly available information about MSBs in 2010-11. During the year, there were 183 newly registered MSBs, and 347 mandatory renewals, bringing the MSB registry total to 955.

Lessons Learned

Canada Revenue Agency

View the text equivalent for Canada Revenue Agency

The value of FINTRAC’s disclosures of financial intelligence has long been recognized by recipients in law enforcement, but more recently the Centre has also been able to increase its assistance to other recipients as well. For example, in the last three years, FINTRAC has sharply increased the number of case disclosures made to the Canada Revenue Agency (CRA). These disclosures have been used for criminal investigations into tax matters and also by their Special Enforcement Program, which targets those persons suspected of deriving taxable income from such crimes as commercial fraud and drug trafficking.

Feedback from the CRA has indicated that FINTRAC’s disclosures have been useful to them in carrying out their investigations and audits, and in recovering millions of dollars in federal taxes.

Recent changes to the Criminal Code Regulations made tax evasion a predicate offence to money laundering. As a result, the Centre can now identify the laundering of money generated by tax evasion for building a case disclosure to send to law enforcement. FINTRAC may also disclose designated information to the CRA where it also has reasonable grounds to suspect the information is relevant to a tax evasion offence.

In Budget 2010, FINTRAC received additional funding to help fight tax evasion. Over the past year, FINTRAC analysts have received in-depth training on the impact of these legislative and regulatory changes and have worked closely with CRA specialists on tax evasion with respect to recognizing the trends and techniques of tax evasion.

With the recent changes in the law, the additional funding and with the specialized training program received from the CRA, FINTRAC is now well equipped to provide more information to help tax investigators with their tax evasion cases.

Strategic Outcome

FINTRAC's detection and deterrence of money laundering and terrorist financing contributes to the public safety of Canadians and helps protect the integrity of Canada's financial system.

Program Activity: Internal Services

2010-11 Financial Resources ($ millions)

Planned Spending	Total Authorities	Actual Spending
7.5	8.2	8.8

2010-11 Human Resources (FTEs)

Planned	Actual	Difference
47	49	2

Performance Summary and Analysis of Program Activity

Promoting excellence in FINTRAC’s workforce and strengthening the management and human resource framework is a priority for the Centre. During 2010-11, FINTRAC had a number of key achievements within the program activity of internal services.

Human Resources

In 2010-11, FINTRAC hired 69 new employees. Selection criteria linked to job requirements and a comprehensive assessment of candidates’ knowledge, experience and abilities ensures that the organization attracts the talent necessary to fulfill its evolving mandate.

Employee development opportunities are an important component of retention and succession management. Employees complete an individual learning plan, which identifies learning opportunities to support them in their current role and for their career development.  In 2010-11, a number of corporate learning opportunities were offered, which emphasized communication, values and ethics, well-being, and the management of change. FINTRAC also held its first Awards and Recognition Ceremony recognizing excellence, leadership, initiative/innovation, teamwork, and work in the community.

FINTRAC continues to review and update corporate policies and controls, aligning them with government priorities. For example, the Centre is aligning its Code of Conduct and Ethics with the forthcoming Public Sector Values and Ethics Code. Focus groups for employees clarified, where necessary, the behavioural indicators associated with its values.

Resource Management

The Centre created a senior level Internal Audit and Evaluation Committee (IAEC) to serve as an internal advisory body. The IAEC provides a forum for discussion of issues arising from relevant audits, evaluations and risk assessments and assists in determining if the existing plans and products are sufficient or if additional effort is recommended.

Security

FINTRAC revised its Security Policy and developed a comprehensive Departmental Security Plan that meets current Treasury Board requirements. The Centre also strengthened security review measures for contracting.

Accommodation

To accommodate the additional staff hired during the period, FINTRAC undertook a series of space optimization projects, both at the offices in Ottawa and at all of its Regional Offices, in order to prepare work space for the new employees. The priorities of each office’s space allocation were revised to permit the installation of new work space at each location.

Concurrent with the installation of new work space, the Centre also undertook an ever-greening program of its furniture inventory. In completing this project, FINTRAC was able to utilize existing furniture from its inventory in many of its space optimization projects and disposed of 75% of the remaining dormant furniture inventory in order to reduce storage costs.

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