What is money laundering?
Money laundering is the process used to disguise the source of money or assets derived from criminal activity. Profit-motivated crimes span a variety of illegal activities from drug trafficking and smuggling to fraud, extortion and corruption. The scope of criminal proceeds is significant – estimated at some $590 billion to $1.5 trillion (U.S.) worldwide each year.
Money laundering facilitates corruption and can destabilize the economies of susceptible countries. It also compromises the integrity of legitimate financial systems and institutions, and gives organized crime the funds it needs to conduct further criminal activities. It is a global problem, 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.
While the techniques for laundering funds vary considerably and are often highly intricate, there are generally three stages in the process:
- Placement: involves placing the proceeds of crime in the financial system; ie Down payments or Private Mortgages
- Layering: involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail and the source and ownership of funds (e.g., the buying and selling of stocks, commodities or property); and,
- Integration: involves placing the laundered proceeds back in the economy under a veil of legitimacy.
FINTRAC’s financial intelligence plays a critical role in helping to combat money laundering. This financial intelligence is used to assist money laundering in the context of a wider variety of criminal investigations, where the origins of the suspected criminal proceeds are linked to drug trafficking, fraud, tax evasion, corruption, and other criminal offences. With these types of crimes, there are victims, there is often violence, and there is real social harm.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit (FIU). The Centre assists in the detection, prevention and deterrence of money laundering. FINTRAC’s financial intelligence and compliance functions are a unique contribution to the safety of Canadians and the protection of the integrity of Canada’s financial system.
FINTRAC acts at arm’s length and is independent from the police services, law enforcement agencies and other entities to which it is authorized to disclose financial intelligence. It reports to the Minister of Finance, who is in turn accountable to Parliament for the activities of the Centre.
FINTRAC was established by, and operates within the ambit of, the Proceeds of Crime (Money Laundering) and its Regulations. The Centre is one of several domestic partners in Canada’s anti-money laundering regime, which is led by the Department of Finance.
FINTRAC fulfills its mandate by engaging in the following activities:
- Receiving financial transaction reports and voluntary information in accordance with the legislation and regulations;
- Safeguarding personal information under its control;
- Ensuring compliance of reporting entities with the legislation and regulations;
- Maintaining a registry of money services businesses in Canada;
- Producing financial intelligence relevant to investigations of money laundering
- Researching and analyzing data from a variety of information sources that shed light on trends and patterns in money laundering and
- Enhancing public awareness and understanding of money laundering.
In addition, FINTRAC is part of the Egmont Group, an international network of financial intelligence units that collaborate and exchange information to combat money laundering. FINTRAC also contributes to other multilateral fora such as the Financial Action Task Force (FATF), the Asia-Pacific Group on Money Laundering (APG) and the Caribbean Financial Action Task Force (CFATF), participating in international policy making and the provision of technical assistance to other FIUs.
FINTRAC is headquartered in Ottawa, with regional offices located in Montréal, Toronto, and Vancouver
As Canada’s financial intelligence unit and anti-money laundering, FINTRAC plays a critical role in helping to combat money laundering.
The Centre produces actionable financial intelligence in support of the money laundering investigations of Canada’s police, law enforcement and national security agencies. FINTRAC also generates valuable strategic financial intelligence, including specialized research reports and trends analysis, for regime partners and policy decision-makers, businesses and international counterparts that shines a light on the nature, scope and threat posed by money laundering.
The Centre is able to fulfill its financial intelligence mandate by working with Canadian businesses to ensure compliance with the Proceeds of Crime (Money Laundering). Compliance with the Act helps to prevent and deter criminals from using Canada’s legitimate economy to launder the proceeds of their crimes. It also ensures that the Centre receives the information that it needs to produce financial intelligence for Canada’s police, law enforcement and national security agencies.
FINTRAC’s financial intelligence is in high demand internationally, as is its specialized intelligence and supervisory knowledge and expertise. The Centre is regularly asked to lead international conferences and workshops and to contribute to global research projects, training and bilateral and multilateral capacity-building initiatives.
In fulfilling its core financial intelligence and compliance mandates, FINTRAC is committed to safeguarding the information that it receives and discloses to Canada’s police, law enforcement and national security agencies. The Centre understands that the protection of privacy is critical to maintaining Canadians’ confidence in FINTRAC and Canada’s broader Anti-Money Laundering Regime.