Canada continues to be an international laggard in the fight against money laundering

In September, 2016, the Financial Action Task Force (FATF) conducted an evaluation of the Canadian anti-money laundering regime and, while noting a number of minor shortcomings and some strengths, found two important features lacking.

The first was a lack of transparency in who owns, controls and benefits from Canadian corporations and trusts.

The second was that lawyers are exempted from Canada's anti-money laundering regime and do not have to report suspicious transactions.

The FATF report concluded that fixing these two problems was crucial to bringing Canada's anti-money laundering regime up to international standards.

The purpose of this post is to determine if any progress has been made in these two areas since the 2016 FATF report was released.

The FATF is a respected international, inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of weapons of mass destruction.

Corruption and money laundering go together. If Canada is increasingly getting failing marks on money laundering from organizations such as the FATF, it is likely failing to deal with other forms of corruption such as tax evasion and human trafficking.

According to some experts and media reports, the tax avoidance and money laundering term “snow washing” is now widely associated with Canada as is the term “Vancouver model” for laundering the proceeds of crime through casinos.

The authors of a recent report commissioned by the government of British Columbia, “Combatting Money Laundering in B.C. Real Estate,” estimated that approximately $46.7 billion was laundered through the Canadian economy in 2018, with B.C. accounting for around $7.4 billion. The authors noted that B.C.’s real estate market makes up about 72 per cent of the B.C.  figure.

In their accompanying letter to B.C.’s Minister of Finance, the authors of the report assert:

“Money laundering is an urgent issue, but not just in B.C. It requires concerted federal and provincial efforts to overcome the barriers that currently hold back an effective criminal justice and regulatory response in Canada. International best practices clearly illustrate that we can do better.”