Story
FATF Urges Canada to Bolster Prosecution of Complex Money Laundering
Summary
The Financial Action Task Force (FATF) has called on Canada to enhance its efforts in prosecuting complex money laundering schemes, citing significant deficiencies despite strong investigative powers. The global watchdog estimates that up to C$113 billion is laundered annually in the country.
The Financial Action Task Force (FATF), a global financial crime watchdog, urged Canada on Tuesday to bolster its investigation and prosecution of complex money laundering cases, according to a new report. The assessment found that while Canada possesses strong investigative capabilities, it has significant deficiencies in prosecuting professional and standalone money laundering operations.
Scale of the Problem
The report, which follows an evaluation launched last November, highlights the serious risks Canada faces from illicit financial flows. The primary sources of laundered funds are linked to major criminal activities, including drug trafficking, fraud, and tax evasion, often involving organized crime groups and professional intermediaries.
According to Canadian government data cited in the report, the scale of money laundering in the country is vast, with estimates ranging from C$45 billion to C$113 billion (approximately US$32 billion to US$80 billion) laundered annually.
Banking Sector in Focus
As part of its review, the FATF assessment team interviewed Canada's six largest banks. The timing is notable, as the review took place several months after TD Bank agreed to a record-setting penalty in the United States to resolve charges related to its anti-money laundering (AML) compliance failures.
AdThe report also noted that Canada's risk-based AML framework, while effective in some areas, can sometimes limit the country's ability to combat financial crime in scenarios deemed lower risk.
Recommendations and Path Forward
Despite the identified shortcomings, the FATF gave Canada an overall rating of "compliant" and acknowledged the progress made since its last report in 2016. The organization provided several key recommendations for Canada to implement within three years, including:
- Strengthening its risk-based supervisory mechanisms.
- Prioritizing the investigation and prosecution of major money laundering cases.
- Enhancing the confiscation of criminal assets.
The FATF stressed that these improvements are necessary for Canada to effectively address its specific risk profile.
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