Policy Insider Takeaways
1. Financial Crime Defined and Its Wide-ranging Impacts: Financial crime involves illicit flows of money within and across Canada, significantly affecting national security and public safety. Its impacts range from exacerbating the fentanyl crisis and driving up the cost of living to undermining public trust in democratic institutions and contributing to broader public safety challenges, with an estimated $100 billion of illicit money involved annually.
2. National Security Threat: According to Dr. Leuprecht, financial crime “is one of the most significant national security challenges that we face because, as you know, money makes the world go round.” It funds activities from foreign interference to drug trafficking, spreads the influence of foreign kleptocrats and organized crime groups using Canada as a safe haven for illicit funds, and affects everyday Canadian life, for instance by destabilizing housing markets.
3. Systemic Weaknesses: Canada is a “safe haven” for financial crime due to systemic weaknesses. Unlike its analogues in other partner countries, FINTRAC, Canada’s financial intelligence agency, lacks enforcement powers, and current legislation requires a “precursor crime” for action, which is inadequate for modern financial crimes, which often use Canada as a way point to launder money. Furthermore, Canada’s regulatory framework is lenient, allowing bad actors to exploit the system with minimal risk of detection and prosecution.
4. International Standing: Canada falls short of international standards set by the Financial Action Task Force (FATF) and is viewed as a weak link in the global financial system, leading to potential reprimands and negative implications for its international reputation.
5. Policy Recommendations: Leuprecht suggests that key measures to combat financial crime in Canada include implementing stringent beneficial ownership laws, holding professionals like lawyers and accountants accountable, and building the political will to prioritize and combat it. Enhancing international cooperation by strengthening partnerships with other countries’ financial intelligence units – the USA’s Office of Foreign Assets Control (OFAC) was cited as a leading example – and adhering to global standards can help track illicit flows across borders, which is essential to taking enforcement actions.
6. Public and Political Engagement: He adds that raising public awareness and making financial crime a political issue are crucial to getting political leaders to act. In his words, “Ultimately we need to make this an election issue … politicians respond to expectations by the electorate.”
