Canada “faces an important domestic and foreign money laundering threat” from criminal organizations that launder billions of dollars in this country.
The stiff warning comes from the Financial Action Task Force (FATF), which also sounds an alarm about the threat against “major financial institutions and some unscrupulous real estate lawyers” targeted by criminals involved in laundering money.
Canadian authorities should not ignore this warning, which comes from an organization set up by the G7 countries in 1989 to promote policies aimed at protecting the global financial system against money laundering and terrorist financing.
While Canada has devoted a lot of energy to fighting terrorist financing, FATF cautions that not enough has been done to prevent the infiltration of criminals into our country, even though the latter poses bigger economic and social threats than the former.
In particular, the organization warns, “the major six financial institutions are the main channels targeted by criminals” and “it is suspected that criminally inclined real estate professionals, notably real estate lawyers, are used to facilitate money laundering.” It says there are more than 650 organized criminal groups operating in Canada, with some involved in mortgage fraud apparently “to launder funds through banks, legitimate businesses and trust accounts.”
FATF writes that “the legal profession in Canada is especially vulnerable to misuse for money laundering and terrorist financing risks,” due largely to its involvement in such activities as real estate transactions and overseeing trust accounts on behalf of clients.
Lawyers enjoy special solicitor-client privileges, and, following a 2015 Supreme Court of Canada ruling, lawyers, legal firms and Quebec notaries are not required to report suspicious activity by their clients.
While laws must always protect the privacy of Canadian citizens, it’s equally important that politicians don’t use this principle to duck their responsibilities to fight criminals from all over the world that pose a threat to our institutions.
Most of them are from the United States, but many come from other countries. Coincidentally, members of the Italian anti-Mafia Parliamentary Commission were in Ottawa recently where they met with Public Safety Minister Ralph Goodale, RCMP Commissioner Bob Paulson, and officials of the justice department.
Not much is known about the meetings, but the powerful Calabrian criminal organization known as ‘Ndrangheta has strong connections in Canada and Italian authorities are trying to get more co-operation to fight money laundering.
The problem is not new. Project Omerta, going back to the 1990s, revealed that the Caruana and Cuntrera crime families in Canada were acting as a connections in this country for the Sicilian Cosa Nostra, providing drug-trafficking routes and channels for money laundering.
The main domestic sources of proceeds of crime, says FATF, “are fraud, corruption and bribery, counterfeiting and piracy, illicit drug trafficking, tobacco smuggling and trafficking, as well as tax evasion.” Criminals target Canada because we have an open and stable economy and “an accessible financial system” vulnerable to “significant foreign money laundering threats.”
These criminals are operating on an enormous scale.
According to FATF, quoting estimates from the Canadian Security Intelligence Service and the RCMP, the total proceeds of crimes in Canada vary between 3 and 5 per cent of our GDP, or about $62 billion (CSIS estimates in 2007).
There are no details about terrorist funding due to national security concerns.
FAFT believes that Canada has a strong regime to combat money laundering and terrorist financing, “which achieves good results in some areas but requires further improvements to be fully effective.”
This takes us to the lack of political will. The Charbonneau Commission in Montreal uncovered a widespread pattern of “fraud, conspiracy to commit government fraud, abuse of trust, secret commissions and laundering the proceeds of a crime.”
The commission made 60 recommendations to prevent such activities, which are yet to be implemented. We have to make sure those recommendations are not ignored by the politicians.