Late last week, the associate chief justice of British Columbia’s Supreme Court, Austin Cullen, released the results of a three-year investigation into money laundering in BC.
The National Post’s Sabrina Maddeaux provides quite a good summary of the lowlights. As the title of her article indicates, over the last decade, “Canada became a money laundering capital while Ottawa slept.”
In fact, Ottawa did much worse than just sleep. The Harper government all but created the problem when it disbanded the Royal Canadian Mounted Police’s Integrated Proceeds of Crime Units as a cost-cutting measure in 2012.
It then took the Trudeau Liberals four years to launch the Financial Crime Coordination Centre, and their promised new Canada Financial Crimes Agency still isn’t up and running.
In the meantime, money laundering in BC alone has become a billion dollar problem.
Cullen has so little faith in Ottawa that he wants Victoria to create its own “dedicated provincial money laundering intelligence and investigation unit with a robust intelligence division.”
Although I sympathize with his evident frustration, I’m not sure that such a response will do much in the long run.
It seems to me that an effective anti-money laundering regime requires a stream-lined, consistent, national response.
Unfortunately, I have yet to find evidence of such a recipe for a country made up of 14 implicated governments (federal, provincial, territorial), not to mention a growing number of self-governing Indigenous nations, each of which have their own views on how the regime should be managed.
What's more, money laundering doesn’t even nest comfortably within the portfolio of a single federal government department.
FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, is housed in the Department of Finance under a minister who has far too many other things to do (not to mention a second portfolio as deputy PM) to make this a priority.
But FINTRAC might not be the best lead agency anyway.
The RCMP investigates and lays charges; the Canadian Border Services Agency is often involved because it tracks people who carry large amounts of cash over the border; Public Safety Canada is supposed to coordinate all things inter-governmental on issues like this one.
And don’t forget Global Affairs Canada, which leads Canada’s anti-money laundering efforts on the world stage.
And that’s before we get to the relevant regulatory agencies (real estate is a big problem in BC; gambling used to be), and the sub-federal governments themselves.
In recent years, I’ve asked some of my students to try to solve this quandary.
Their suggestions have varied from anointing a czar-like figure operating out of the Privy Council Office (the Prime Minister’s department); creating a new organization within Public Safety Canada that brings all of the actors together (which sounds a lot like what Ottawa is trying to do with the Canada Financial Crimes Agency); or empowering a single existing government department to lead.
The problem is that each idea has weaknesses (which is why the assignment works…).
A czar in the PCO would further centralize a government that already micromanages too much. Public Safety has proven incapable of corralling its own agencies, let alone their provincial equivalents. A new organization would lack the pre-established relationships with provincial governments that will be critical to success.
And none of these solutions integrates Global Affairs Canada.
Does that mean that we give up? Of course not, and to that end there’s much to learn from the Cullen report.
But the ongoing failure of federal and provincial anti-money laundering policies should serve as a reminder of both the dangerous implications of reckless cuts to critical government programs , as well as the need for humility when thinking about the overwhelmingly complex problems that Canadian governments are regularly faced with today.
***
For more on money laundering in Canada, you can request a copy of Criminal Intelligence Service Canada's recent report here.
***
To be notified of my next post, follow me on Twitter @achapnick or on LinkedIn at https://www.linkedin.com/in/adam-chapnick/.
You can subscribe to my newsletter at https://buttondown.email/achapnick.
The National Post’s Sabrina Maddeaux provides quite a good summary of the lowlights. As the title of her article indicates, over the last decade, “Canada became a money laundering capital while Ottawa slept.”
In fact, Ottawa did much worse than just sleep. The Harper government all but created the problem when it disbanded the Royal Canadian Mounted Police’s Integrated Proceeds of Crime Units as a cost-cutting measure in 2012.
It then took the Trudeau Liberals four years to launch the Financial Crime Coordination Centre, and their promised new Canada Financial Crimes Agency still isn’t up and running.
In the meantime, money laundering in BC alone has become a billion dollar problem.
Cullen has so little faith in Ottawa that he wants Victoria to create its own “dedicated provincial money laundering intelligence and investigation unit with a robust intelligence division.”
Although I sympathize with his evident frustration, I’m not sure that such a response will do much in the long run.
It seems to me that an effective anti-money laundering regime requires a stream-lined, consistent, national response.
Unfortunately, I have yet to find evidence of such a recipe for a country made up of 14 implicated governments (federal, provincial, territorial), not to mention a growing number of self-governing Indigenous nations, each of which have their own views on how the regime should be managed.
What's more, money laundering doesn’t even nest comfortably within the portfolio of a single federal government department.
FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, is housed in the Department of Finance under a minister who has far too many other things to do (not to mention a second portfolio as deputy PM) to make this a priority.
But FINTRAC might not be the best lead agency anyway.
The RCMP investigates and lays charges; the Canadian Border Services Agency is often involved because it tracks people who carry large amounts of cash over the border; Public Safety Canada is supposed to coordinate all things inter-governmental on issues like this one.
And don’t forget Global Affairs Canada, which leads Canada’s anti-money laundering efforts on the world stage.
And that’s before we get to the relevant regulatory agencies (real estate is a big problem in BC; gambling used to be), and the sub-federal governments themselves.
In recent years, I’ve asked some of my students to try to solve this quandary.
Their suggestions have varied from anointing a czar-like figure operating out of the Privy Council Office (the Prime Minister’s department); creating a new organization within Public Safety Canada that brings all of the actors together (which sounds a lot like what Ottawa is trying to do with the Canada Financial Crimes Agency); or empowering a single existing government department to lead.
The problem is that each idea has weaknesses (which is why the assignment works…).
A czar in the PCO would further centralize a government that already micromanages too much. Public Safety has proven incapable of corralling its own agencies, let alone their provincial equivalents. A new organization would lack the pre-established relationships with provincial governments that will be critical to success.
And none of these solutions integrates Global Affairs Canada.
Does that mean that we give up? Of course not, and to that end there’s much to learn from the Cullen report.
But the ongoing failure of federal and provincial anti-money laundering policies should serve as a reminder of both the dangerous implications of reckless cuts to critical government programs , as well as the need for humility when thinking about the overwhelmingly complex problems that Canadian governments are regularly faced with today.
***
For more on money laundering in Canada, you can request a copy of Criminal Intelligence Service Canada's recent report here.
***
To be notified of my next post, follow me on Twitter @achapnick or on LinkedIn at https://www.linkedin.com/in/adam-chapnick/.
You can subscribe to my newsletter at https://buttondown.email/achapnick.
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