ARCHIVED - Department of Finance - Supplementary Tables

The Department of Finance Canada will provide effective oversight of Canada's Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime.

The Department will complete the 10-year Treasury Board-mandated evaluation of the AML/ATF Regime to assess its effectiveness and access to continued funding.

The Department will implement the Budget 2009 measure related to counter-measures against illicit financing.

The Department will monitor the financial sector for money laundering and terrorist financing risks as well as other emerging illicit financing risks.

The Department will participate in international forums related to combatting money laundering and terrorist financing such as the G7 Financial Experts meetings, the Financial Action Task Force, the Caribbean Financial Action Task Force, and the Asia Pacific Group on Money Laundering. In addition, the Department will contribute and respond to G20 work on illicit financing.

The Department of Finance Canada continued to address policy and operational issues to ensure the effectiveness of the AML/ATF Regime. The Department also hosted spring and fall meetings of the AML/ATF Regime's Public/Private Sector Advisory Committee.

The Department completed the 10-year evaluation of the AML/ATF Regime and led the interdepartmental working group conducting the evaluation. The evaluation report was published on the Department's website.

The Department continued to implement the Budget 2009 measure related to counter-measures against illicit financing, including legislative amendments promulgated as part of the legislation that implemented Budget 2010, the Jobs and Growth Act.

The Department consulted with provincial gaming authorities on modernizing the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to explicitly cover online casinos. The Department also met regularly with domestic partners to discuss potential money laundering and terrorist financing risks.

The Department actively participated and undertook a leadership role at plenary and intercessional meetings of the Financial Action Task Force (FATF), the Caribbean Financial Action Task Force (CFATF), the Grupo de Accion Financiera de Sudamerica (GAFISUD) and the Asia/Pacific Group on Money Laundering (APG) plenary as well as meetings of the G7 Financial Experts.

As the head of Canada's delegation at international forums relating to anti-money laundering and combatting the financing of terrorism (AML/CFT), the Department:

• coordinated federal partners' contributions;
• played a challenge function in FATF, APG, GAFISUD and CFATF mutual evaluation processes, a comprehensive peer review process that is the cornerstone of the global implementation of FATF standards (the FATF 40 Recommendations on money laundering and the 9 Special Recommendations on Terrorist Financing);
• contributed to the development of FATF policy and standards and the analysis of new AML/CFT trends and typologies;
• hosted a domestic workshop to feed into international work on incorporating effectiveness into the mutual evaluation process;
• participated in the FATF International Co-operation Review Group to identify and monitor high-risk jurisdictions;
• identified and leveraged funds to support capacity building and technical assistance for APG and CFATF as well as training for their individual members; and
• provided advice and guidance to CFATF member countries on governance and capacity issues.

The Department of Justice Canada, including the Criminal Law Policy Division and the Criminal Division of the Litigation Branch, continued to do operational work in support of the AML/ATF Regime. Counsel from the Criminal Division continued to provide legal advice to the Department of Finance Canada and to other participants in the AML/ATF Regime, and attended a number of FATF meetings.

The funds targeted for the Department of Justice Canada within the AML/ATF Regime were used for Regime-related purposes only.

PPSC plays a significant role in Canada's Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime. For 2010–11, it is anticipated that information provided to law enforcement by the Financial Transactions and Reports Analysis Centre of Canada  (FINTRAC) will result in a need by law enforcement for more prosecutorial legal advice. It is also anticipated that this information will result in additional charges being laid for money laundering and terrorist financing offences, thus resulting in an increased workload for prosecutors.

PPSC also has responsibilities related to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). The work planned includes applications for production orders and prosecutions for PCMLTFA-related offences.

In addition, resources will be used for the training of law enforcement personnel and prosecutors and for the development and coordination of policy related to AML/ATF.

Finally, PPSC resources will be used to carry out work related to the Financial Action Task Force, as required.

During 2010–11, 6,494 charges for the possession of proceeds of crime and 30 charges for money laundering were laid under the Criminal Code, as well as 31 charges under the PCMLTFA. There were no charges laid related to the terrorism financing provisions of the Criminal Code during this period.

Legal advice was provided by in-house counsel against 41 per cent of the possession of proceeds of crime files, 40 per cent of the money laundering files, and 19 per cent of the PCMLTFA files that these new charges represent.

Finally, PPSC counsel provided both formal and ad hoc training to law enforcement personnel over the course of investigations. Resources were also dedicated to policy development and coordination to ensure consistency across all regions.

FINTRAC's financial intelligence and case disclosures on money laundering will be widely disseminated to, and used by, law enforcement and intelligence agencies.

FINTRAC will provide enhanced compliance in high-risk-reporting entity sectors.

In 2010–11, FINTRAC disclosed 769 cases of suspected money laundering, terrorist financing, and threats related to the security of Canada to law enforcement and security partners. This represents a significant increase over the 579 cases disclosed in 2009–10 and the 556 cases disclosed in 2008–09.

In 2010–11, the average timeliness of case analysis improved by 18 per cent, decreasing from 68 days to 56 days. This decrease was due to improved business processes and a better understanding of partner needs.

FINTRAC continued to make improvements to its mechanisms for defining and prioritizing partners' intelligence requirements. These enhancements have allowed FINTRAC analysts to better understand and respond to the needs of investigative and intelligence partners and to focus on the cases of highest importance.

FINTRAC also continued to fulfill the needs of various partners and stakeholders in producing and disseminating a wide range of strategic financial intelligence assessments, briefs and reports. These products served to inform government policy and decision makers as well as reporting entities about money laundering and terrorist financing issues, methods, indicators and case studies, which enabled them to better combat money laundering and terrorist financing. One example during the year was the third report in FINTRAC's Typologies and Trends Report series entitled Money Laundering and Terrorist Financing (ML/TF) Typologies and Trends for Canadian Money Services Businesses (MSBs). This report, published in July 2010, will enable MSBs and other reporting entities and partners to recognize and combat money laundering and terrorist financing more effectively.

Examinations continue to be a primary method for FINTRAC to ensure that reporting entities are complying with their obligations under anti-money laundering and anti-terrorist financing legislation.

During 2010–11, FINTRAC made a number of enhancements to its current examination plan. The aim was to increase its coverage of reporting entities operating in the higher-risk sectors by examining the key market players, representing the majority of the respective sectors' market share, transactions and assets. FINTRAC also completed 684 examinations, of which 376 (55 per cent) were on-site examinations and 308 (45 per cent) were desk examinations.

The Administrative Monetary Penalties (AMPs) program continues to encourage change in non-compliant behaviour. In its second year of implementation, an additional eight AMPs have been publicly named on FINTRAC's website, and one Non-Compliance Disclosure  was submitted to law enforcement.

The RCMP will enhance national and international opportunities for the detection and investigation of money laundering activities, including leading national joint cash-smuggling interdiction operations.

The RCMP will develop Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) disclosures, as well as other intelligence, to a point where resources from Integrated Proceeds of Crime units or from elsewhere in the RCMP could be redirected to investigations in order to increase seizures.

The RCMP will review current distribution of resources in the Anti-Money Laundering Program to determine effectiveness, with a view to maximizing available resources.

The RCMP's Crime Branch has an on-site resource from the U.S. Internal Revenue Service's (IRS's) Criminal Investigation section to share intelligence from IRS databases for ongoing RCMP investigations involving U.S. targets and/or Canadians living in the U.S. Files with an international component for 2010 totalled 181.

As part of the Integrated Proceeds of Crime and anti-money laundering (AML) human resource allocation review in 2010, five AML teams have been created in Ottawa, Montreal, Toronto, Calgary and Vancouver. This model will allow proactive FINTRAC intelligence to develop into large-scale money laundering and proceeds of crime investigations.

Through the gathering and analysis of financial intelligence, the Anti-Terrorist Financing Team (AFTF) will focus on converting that intelligence into proactive investigations, thus enhancing its ability to detect and deter terrorist financing activities.

The AFTF will continue to work closely with domestic partners to further criminal investigations into terrorist financing and will participate in and contribute to international forums, such as the Financial Action Task Force and international law-enforcement working groups on terrorist financing.

The ATFT supports counter-terrorism strategies related to terrorist financing, financial intelligence gathering, investigations and enforcement. In 2010–11, ATFT supported 30 major investigations.

In 2010-11, ATFT submitted six voluntary information reports to the Financial Transactions and Reports Analysis Centre (FINTRAC).

In 2010–11, ATFT received 13 disclosures from FINTRAC.

ATFT continues to provide training to the RCMP and its partner agencies. In 2010–11, two Anti-Terrorist Financing courses were delivered, with 52 candidates receiving training.

ATFT continues to support the Financial Action Task Force (FATF), the Asia/Pacific Group on Money Laundering, and the Middle East and North Africa Financial Action Task Force. Building on existing partnerships with the lead department, the Department of Finance Canada, and its partners, the RCMP has participated at four practitioners' groups and conferences.

The Department of Finance Canada continues to consult with ATFT on FATF-related matters, such as international cooperation, information sharing and related projects.

CRA will focus on the following four pillars:

• Participating in committees and initiatives to manage and enhance Canada's Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime;
• Enhancing operational relationships with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and other partners in the AML/ATF Regime;
• Conducting research and analysis; and
• Contributing to the work of international organizations to enhance cooperation between tax adminis-trations and AML/ATF authorities.

In 2010–11, SEP will continue to thoroughly review all disclosures received from FINTRAC and to select those with potential for audit. The projected number of audits remains at 90, with a projected federal tax recovery of $7 million. However, the complexity of the files resulting from FINTRAC referrals is increasing, and this may lead to a reduction in the number of audits SEP is able to complete in 2011–12.

The results of these audits will be gathered for intelligence purposes to determine whether trends can be established.

CRA has made significant efforts to enhance its operational relationships FINTRAC and other partners in the AML/ATF Regime. During this reporting period, CRA coordinated an information session with FINTRAC, focusing on its operational functions in order to improve the quality of information shared between the two organizations.

CRA continues to explore options to increase its interaction with FINTRAC and its law enforcement partners, particularly the Royal Canadian Mounted Police. Meetings at the headquarters level were held to discuss and clarify roles, expectations, impediments and responsibilities to maximize the partnership and the shared goal of addressing the accumulation of illicit wealth in the criminal economy.

CRA received 124 FINTRAC disclosures between April 1, 2010, and March 31, 2011. The majority of the disclosures have been worked on by SEP, which conducts audits, delinquent actions and other enforcement activities on individuals suspected of deriving income from illegal activities.

In 2010–11, SEP completed 115 audits based upon FINTRAC disclosures, with total federal income taxes reassessed in the amount of $26,756,939 and total Goods and Services Tax / Harmonized Sales Tax dollars assessed at $813,069.

Of the 115 audits completed, four cases were referred for consideration of criminal prosecution related to tax evasion.

CRA has begun tracking information from FINTRAC disclosures in order to identify trends in tax non-compliance. This intelligence will be useful for risk assessment of future disclosures and other referrals from law enforcement agencies to CRA.

CRA, under the Income Tax Act, has responsibility for administering the registration system for charities. This recognizes that the existence of a strong regulatory deterrence against terrorist abuse of charities contributes to suppressing the financing of terrorism in Canada and to protecting and preserving the social cohesion and well-being of Canadians.

CRA's regulatory oversight of charities has been strengthened by the enactment of complementary measures under the Charities Registration (Security Information) Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and by changes to the Income Tax Act that authorize broader information sharing between anti-money laundering and anti-terrorist financing (AML/ATF) agencies.

Under these authorities, intelligence provided to CRA assists in its mandate to protect the integrity of the registration system for charities, and information disclosed by CRA can be used for investigative purposes.

In 2010–11, CRA will consolidate its capacity to identify and respond to cases involving possible links to terrorism through continuing information technology (IT) development, expanding formal information-sharing arrangements with Regime partners, refining performance measurement and risk management tools, and staffing and training its full complement of program full-time equivalents.

Results delivered in 2010–11 focused on enhancing the suite of IT tools to support analysis and performance measurement; refining risk management tools; and continuing to staff and train the full complement of program full-time equivalents. CRA continued the normal business of reviewing applications for charitable registration, monitoring registered charities, and exchanging information under legal authorities with its partners, in relation to risks of support for terrorist activities. CRA revoked the registration of three Canadian charities on grounds that included their links to terrorism. It also continued to develop and enhance relationships and training with Regime partners, and provide a strong CRA presence in interdepartmental committees addressing cross-cutting policy and review activities relevant to Canada's AML/ATF regime.

Note: The numbers in columns 4 and 5 have been revised from what was originally reported in the 2010–11 Report on Plans and Priorities.

During 2010–11, the CBSA performed more than 1,640 seizures under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, totalling over $30 million. Approximately $2.6 million of this total was forfeited to the Crown, and penalties have been assessed in excess of $800,000.

Over 100 seizures have resulted in forfeiture as suspected proceeds of crime or funds for the use of terrorist activities.