The Federal Government is moving forward with plans to establish the Canada Financial Crimes Agency, a new federal agency responsible for investigating and enforcing complex financial crimes. This article outlines recent steps taken by the Government and the current outlook on the road to implementation.
During the 2021 Federal Election, the Liberal Party campaigned on a policy to tackle the risk posed to the Canadian economy by fraud, money-laundering, insider trading, and other financial crimes. To achieve this goal the Liberal Party promised to establish the Canada Financial Crimes Agency (CFCA). Two-years later, the Federal Government is now one step closer towards making the CFCA a reality. On June 6, 2023, the Department of Finance published a White-Paper: the Consultation on Strengthening Canada's Anti-Money Laundering and Terrorist Financing Regime ("Consultation").
As discussed in our previous article, the Consultation provided an overview of Canada's anti-money laundering and anti-terrorist financing regime (the "AML/TF Regime") and outlined the evolving risks of money laundering and terrorist financing faced by Canada.
The Consultation also outlined the objectives of the CFCA and core considerations in the development of the CFCA. The Consultation sought input on how the CFCA should be structured to enable more effective investigation, prosecution, and recovery of proceeds of crime. In doing so, the Consultation posed a number of questions regarding the mandate, core activities, and functions of the CFCA.
Specifically, the Consultation sought views on whether the mandate of the CFCA should be limited to what is typically thought of as financial crime (such as, fraud, money-laundering, and customs offences) or expanded to include so-called "profit-motivated crimes" such as drug trafficking and tobacco smuggling. The Consultation noted that criminals engaged in the latter type of activities often engage in money-laundering as a corollary to the underlying crime.
The Consultation further sought input on the core activities and functions of the CFCA including, what tools, powers, and programs should be provided to the CFCA to ensure it can combat financial crime effectively.
Recommendations by Transparency International
One set of recommendations on how to structure and develop the CFCA has been voiced by Transparency International, a global civil society organization focused on combatting corruption. In the past, Canada's AML/TF regime has received scrutiny from international observers like Transparency International for weak enforcement.
In their White Paper: Establishing a Canadian Financial Crime Agency ("TI White Paper"), Transparency International Canada proposed recommendations about the structure of the CFCA. The recommendations are based on a comparative analysis of Financial Crime Agencies in countries like Australia and the United Kingdom.
First, the TI White Paper recommends an expansive mandate for the CFCA that not only includes traditional financial crimes, but also "profit-motivated crimes" or "predicate crimes" which create the impetus for money-laundering. In other words, the TI White Paper advocates for a broad mandate whereby the CFCA could prosecute and investigate not only money-laundering itself, but the crimes that generate the need to launder money through Canada's financial system and economy.
Second, the TI White Paper recommends that the CFCA be both an enforcement body as well as a coordination body. The TI White Paper contrasts this approach with how Canada's securities regulatory agencies investigate and prosecute bribery offences. Upon discovering a bribery offence, an agency may choose to prosecute this as a misrepresentation in financial documents filed with the agency, instead of collaborating with the Royal Canadian Mounted Police to prosecute a bribery offence under the Corruption of Foreign Public Officials Act. Having a national body to oversee and coordinate could overcome these problems and create a systematic approach for the investigation and prosecution of financial crimes.
The recommendations by the TI White Paper are not conclusive. Instead they contribute to the ongoing conversation and analysis that the Federal Government and anti-corruption experts are having about how to improve Canada's AML/TF Regime.
The Federal Government is expected to provide further details on the CFCA's structure and mandate in the Fall of 2023. However, as noted, uncertainty remains on the CFCA's jurisdiction to investigate and enforce financial crimes. Additionally, concerns remain on how the CFCA will interact with other federal agencies and within Canada's existing AML/TF regime.
Implementing a robust and powerful CFCA would be a potent step in strengthening Canada's AML/TF regime and help to reduce the risks posed to the Canadian economy by fraud, money-laundering, insider trading, and other financial crimes. Without a strong mandate and effective enforcement and coordination abilities, the same criticisms and issues that impact Canada's current AML/TF regime (as discussed in our previous article) will likely afflict the CFCA as well.
Originally Published by 4 October 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
