Enforcement Efforts to Deter Money-Laundering
CANADIAN MONEY LAUNDERING LAWS AND PROGRAMS
Bill C-61establishes the criminal offense of "money laundering"; strengthens the ability of law enforcement to prosecute crimes involving the laundering of funds; establishes procedures to allow law enforcement to seize and freeze alleged proceeds of crime and establishes procedures to allow authorities to obtain forfeiture of property that is acquired with the proceeds of crime.
In Canada, an offender may be imprisoned for a term of up to 10 years and upon conviction, the Court may order the forfeiture of any property derived through the use of illegal proceeds.
This applies to anyone (e.g. financial institution or employee) who deals with any property with an intent to conceal or convert the property, and has knowledge that all or part of property is derived from an Enterprise Crime Offence (ECO) or Designated Drug Offence (DDO).
"Enterprise Crime Offence" and "Proceeds of Crime" in this context relate to proceeds obtained or derived directly or indirectly as a result of an offence against any of 24 provisions in the Criminal Code (e.g. arson, bribery) or against section 354 of the Criminal Code (possession of property obtained by crime) or being an accessory after the fact, in relation to, or any counseling in relation to, any of the above.
Financial Transactions and Reports Analysis Centre of Canada
Legislation will establish an independent government body, to be known as the Financial Transactions and Reports Analysis Centre of Canada, which will be a central repository for information about money laundering activities across Canada.
The Centre will operate independently from law enforcement agencies, and the disclosure of information by the Centre will be strictly controlled. They will be authorized to provide key identifying information of suspicious transactions (e.g., name, date, account number, value of the transaction) to the appropriate police force if they have reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence.
Reporting
Each financial institution has a senior officer responsible for anti-money laundering processes. In addition, an officer at each branch that deals directly with customers must be responsible for ensuring that money laundering deterrence and detection procedures are in place.
The Proceeds of Crime Act and Regulations require the completion and retention of a "large cash transaction record" for any receipt of cash in the amount of $10,000 or more for a period of five years.
Some examples of cash transactions are cash deposits; any request to purchase, for cash, travelers cheques or drafts; any request to transmit cash to some other branch or financial institution in or outside Canada.
Regulated financial institutions, casinos, currency exchange businesses, as well as other financial intermediaries (such as lawyers and accountants), will be required to report any financial transactions that they have reasonable grounds to suspect are related to a money laundering offence. It is proposed that cheque cashers, money order vendors; and money transmitters be required to provide reports as well.
The maximum penalties for failing to report suspicious financial transactions under the Bill include fines of up to $2 million and imprisonment for up to five years. People are exempt from civil or criminal liability arising from the disclosure of information regarding suspicious transactions to law enforcement authorities, which in turn should be reported to the Local Proceeds of Crime Section of the Royal Canadian Mounted Police without delay.
Sample of Declaration Required
I/we declare that the source of funds for the above transaction is as follows:
Consent is hereby given to this financial institution to disclose this transaction to law enforcement authorities.
Client Signature Prepared By (Signature, Title)
Authorized Officer (Signature, Title) Date
Reporting of Large Cross-border Movements of Currency
Individuals and entities that import, export or transport large amounts of currency or monetary instruments across the Canadian border will be required to report such activities to a Canada Customs officer.
The United States requires persons transporting currency or monetary instruments over US $10,000 to file a report with U.S. Customs. It is proposed that C $15,000 be adopted for Canada and include traveler's cheques and other bearer instruments such as money orders, personal and cashier cheques and securities.
Canada Customs will have the authority to retain currency or monetary instruments for a prescribed period of 70 days before they are considered to be forfeited to the Crown.
The regulations provide for the mandatory return of the seized currency or monetary instruments on payment of a prescribed penalty, unless the officer suspects the currency is proceeds of crime. The prescribed penalty for non-reporting, when there is no reasonable suspicion of money laundering, would have fixed penalties ranging from $250 to $1,000, depending on the circumstances, including whether the person is a repeat offender or not.
Use of $1000 Bills
Large-value bank notes make it easier to conceal large sums of money for movement inside and outside the country. Compared to all other denominations, $1000 notes are disproportionately used for money laundering. Removing the $1000 note from circulation will make it more difficult for this illicit activity to take place.
There are about 3.8 million $1000 Canadian bank notes in circulation. This accounts for less than one-third of one per cent of the total number of notes in circulation but represents about 10% of the value of all currency in circulation.
Existing Canadian notes will gradually be withdrawn from circulation but individuals will still be free to hold and use those $1000 notes that remain in circulation. They will retain their status as legal tender for their full face value.
AMERICAN MONEY LAUNDERING LAWS AND PROGRAMS
Money Laundering Control Act
The Money Laundering Control Act (MLCA) makes money laundering a federal offense, punishable by prison sentences of up to 20 years.
The intent of the MLCA is to authorize forfeiture of the profits earned by launderers; to encourage financial institutions to come forward with information about money launderers without fear of civil liability and to provide Federal law enforcement agencies with additional tools to investigate money laundering.
Bank Secrecy Act
The title of the Act is misleading, as its main purpose is to limit, rather than to enhance, secrecy regarding certain financial transactions. The Bank Secrecy Act (BSA) requires private individuals, banks and other financial institutions to provide Currency Transaction Reports (CTRs) on cash transactions greater than $10,000, to report suspicious transactions and to implement anti-money laundering programs.
The Financial Crimes Enforcement Network (FinCEN), an agency of the United States Department of the Treasury uses data-mining techniques to identify targets for investigations of money laundering and other financial crimes.
They process approximately 200,000 reports a week on large currency transactions. Those reports are analyzed using link analysis to establish whether there are related transactions that may indicate suspicious activity. These linked reports are combined with additional information from law enforcement and Treasury records along with additional analytical tools to eliminate legitimate activities.
Training Programs
Financial crime is complex, and the investigation of financial crime requires highly trained investigators with special skills.
Training programs to combat them include the FBI's white collar and financial fraud program, FLETC's international banking and financial fraud institute program, IRS Criminal Investigations Division training on money laundering and financial fraud, the DEA's drug money laundering investigations, FINCEN's initiatives to establish Financial Investigative Units (FIUs), and the US Secret Service programs in credit card fraud and counterfeiting.
Treaties and Agreements
Mutual Legal Assistance Treaties (MLATs) allow generally for the international exchange of evidence and information in criminal and related matters. In money laundering and asset forfeiture cases, they can be extremely useful for exchanging banking and financial records.
Financial Information Exchange Agreements (FIEAs) facilitate the exchange of currency transaction information between the U.S. Treasury Department and the finance ministries of other governments.
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