A vast “financial underworld” is operating in Canada whose members commit fraud and other financial crimes without punishment, corroding communities, undermining democratic institutions and even the country’s prosperity, the authors of a new book say.
That’s because elected leaders at all levels are enabling and emboldening financial criminals by failing to fight them or even try to hamper their lawbreaking efforts, according to the co-authors of Dirty Money: Financial Crime in Canada.
“Canada is a preferred destination to launder ill-gotten gains with impunity,” say Jamie Ferrill and Christian Leuprecht, the co-editors of Dirty Money. They also wrote some of its 16 chapters.
Leuprecht is a Queen’s University professor, security expert and author. Ferrill is a Canadian political sociologist who spent eight years with the Canada Border Services Agency before becoming a financial crime instructor at the Australian Graduate School of Policing and Security at Charles Sturt University in Canberra, Australia. The pair don’t mince words.
“Numerous investigations that ultimately went nowhere have revealed weak legislation and an under-resourced enforcement regime that is manifestly not fit for purpose. Chances of getting caught are almost nil, civil and criminal asset forfeiture is weak, and penalties are negligible,” their book argues.
The 417-page tome is published by McGill-Queen’s University Press. It’s an unprecedented, though timely, attempt by a leading group of the country’s top financial crime investigators, intelligence professionals, lawyers and financial crime thinkers.
A broad mix of men and women, academics and private sector executives, they have painstakingly collected everything the Canadian public ought to know about what’s going on (or not) in Canada, hoping exposure and discussion of the problems will increase public awareness and trigger reform.
Action is needed because the current situation is not pretty, argue Leuprecht and Ferrill. Globalization becomes a financial crime accelerant because authorities in Canada “are struggling to do even the bare minimum,” never mind co-ordinate transnational criminal probes, say the co-editors.
“Dirty money drives up the cost of housing, aggravates gang violence and related shootings, is behind the synthetic opioids that manifest in an overdose epidemic, enables human trafficking and other forms of gross exploitation, finances nuclear weapons proliferation by rogue states, and helps malicious countries evade international sanctions while enabling foreign interference in Canada’s democratic institutions by hostile state and non-state actors,” their book states.
“Financial fraud bilks seniors of their retirement savings and ransomware costs companies billions in losses annually. The public bears the costs: through higher prices, taxation (lost revenue and increased fiscal costs for law enforcement), and rising insurance premiums,” the book adds.
The book includes chapter contributions from leading financial crime fighters from English and French Canada, exploring money laundering, underground banking, organized crime groups and anti-money laundering efforts, and financial intelligence activities.
One chapter examines the mysterious workings of the country’s super-secret financial intelligence agency, the Financial Transactions and Reports Analysis Centre of Canada, known as FINTRAC.
Katarzyna McNaughton, a visiting post-doctoral fellow at the Royal Military College of Canada in Kingston, Ont., reveals that FINTRAC produces and delivers a large volume of proactive disclosures about potential major financial crimes to police agencies.
However, the intelligence disclosures often sit unused or acted upon inside police services because investigators are already overwhelmed with their own mountain of cases, McNaughton writes, quoting an unidentified former FINTRAC worker as her source. (That same information also emerged in a briefing note by the RCMP earlier this year.)
FINTRAC spokesperson Darren Gibb took issue with the claims, saying 96 per cent of the feedback that FINTRAC received last year from law enforcement and national security agencies “indicated that its financial intelligence was both valuable and actionable.”
Gibb said in an emailed statement to Global News that FINTRAC provided 2,085 financial intelligence disclosures last year to support money laundering and terrorist activity financing probes across Canada and the world – nearly six disclosures every day. The centre’s intelligence contributed to 292 major, resource-intensive investigations as well as “many hundreds of other individual investigations” at the municipal, provincial and federal levels across the country, Gibb added.
Another chapter explores how criminal organizations use government-run casinos and real estate transactions to support their illegal activities and launder dirty money into the clean economy.
Two additional chapters explore the insidious nature of so-called “trade-based money laundering,” or criminal organizations using legitimate businesses to hide the laundering of money from their crimes.
Dirty Money discusses just how much profit from criminal activities is sloshing around in Canada, with informed estimates between $46.7 and $54 billion per year. No matter which estimate you favour, it remains enormous and more than 2,000 organized crime groups across the country are involved.
“It is equivalent to the size of Nova Scotia’s GDP in 2018,” writes Denis Meunier, a former deputy director of FINTRAC turned anti-money laundering consultant. Meunier explores the dysfunction of Canada’s anti-money laundering regime in another chapter.
The book also devotes a chapter to cryptocurrency laundering, and another on the state of money laundering regulation and enforcement by University of Calgary assistant law professor Sanaa Ahmed that may leave you sleepless.
Ahmed explains how Canada, despite having a strong money laundering regime, generates dismal results because the country lacks a clear national commitment to counter the misdeeds. The country repeatedly fails to deliver on its promises due to missteps, shifting priorities and resource shortfalls.
Instead, money laundering has emerged as an industry within the broader Canadian political economy, Ahmed argues.
The federal and provincial governments’ commitments and pronouncements against money laundering are of questionable worth when you stand them beside the slew of seemingly contradictory and failed policies, weak regulations and inaction, she writes.
“Given the state’s demonstrated and repeated inability to deliver on its promises, how reasonable is the presumption that the Canadian state wants to prevent or even contain laundering?” Ahmed asks. “This is perhaps why the Canadian state uses one set of policies (laundering regulation) to appease the cheap housing lobbyists and another set of policies (investment and immigration policies) to protect its own interests and mollify those who have come to rely on laundered monies for their livelihood.”
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