Banks in Canada have a long history in the fight against money laundering. The banking sector was the first industry to voluntarily report suspicious financial transactions to the Royal Canadian Mounted Police (RCMP), long before they were required to do so. The CBA and its members have consistently supported the federal government’s ongoing efforts to enhance and strengthen Canada’s anti-money laundering and anti-terrorist financing (AML/ATF) regime to ensure it is effective and efficient. Banks are also active participants in the Government of Canada’s Advisory Committee on Money Laundering and Terrorist Financing.
Bank efforts to combat money laundering and terrorist financing
The central goal of a bank’s AML/ATF compliance program is to deter, detect and report suspicious activity, while protecting the integrity of Canada’s banking system and the privacy of law-abiding customers. Banks take the fight against money laundering very seriously and devote significant resources into AML/ATF programs, internal controls and employee training.
Banks are subject to federal regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This requires the banks as well as other reporting entities such as real estate brokers, casinos and money service businesses to implement client identification, record keeping and compliance regime requirements, and to report suspicious transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
FINTRAC is an independent agency that reports to Canada’s Minister of Finance. FINTRAC analyses the data reported by banks and other reporting entities, and where appropriate, is authorized to disclose financial intelligence to law enforcement agencies.
Compliance regimes are supervised by senior management at the banks as well as by committees of the banks’ Boards of Directors, which are appointed to oversee risk management and regulatory compliance with ever-evolving tax laws, securities laws, and other rules imposed by banking supervisors.
Bank support for recent federal government efforts to strengthen the anti-money laundering regime
Banks in Canada have long worked in lockstep with the Government of Canada, law enforcement agencies, and other partners to implement effective AML/ATF measures to stanch the flow of funds that support illegal activities and protect the integrity of our financial system.
The Canadian banking sector recognizes its key role in combating money laundering and terrorist financing and has consistently supported the efforts of the Government of Canada to develop an effective and efficient regime.
Banks have substantially increased their AML controls in the past decade and expanded their compliance departments to address money laundering risks. They have also been vocal advocates for provisions that would allow for more investigations and prosecutions of money laundering offences, including calling for a comprehensive beneficial ownership registry and increased information sharing for AML purposes to support the work of police services. The banking sector is also working with the Department of Finance, FINTRAC, law enforcement agencies and prudential regulators on projects to identify, prevent and punish those who violate AML/ATF rules.
Banks support the Government’s recent efforts in creating the Anti-Money Laundering Action, Coordination and Enforcement Team, and in collaborating closely on public-private partnership (PPP) projects to improve the overall efficiency and effectiveness of the system. An example of that is Project PROTECT, an innovative PPP between banks and FINTRAC to tackle illicit proceeds from human trafficking.
To be efficient and effective, Canada’s AML/ATF regime must remain established at the national level, supported by federal, provincial and territorial engagement, and focus on priority areas of risks, such as expanding regulatory oversight of sectors that lack comprehensive federal oversight. Moreover, the CBA and its members continue to advocate for a regime that is risk-based, helping to ensure that the information that is collected from reporting entities is targeted to money laundering risks and leads to clear, tangible outcomes.
Canadian bank practices in other countries
Canadian banks that operate foreign branches or foreign subsidiaries in other countries must implement a compliance program to detect money laundering and terrorist financing similar to what is required in Canada. Banks use their Canadian AML/ATF regime as a baseline and overlay foreign regulations, policies, and procedures to ensure they comply with the laws of the countries in which they operate.
More information about Canada’s AML/ATF regime can be found on the FINTRAC website at www.fintrac.gc.ca.