From: Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
As Canada's financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), or 'the Centre', helps to combat money laundering, terrorist activity financing and threats to the security of Canada, while ensuring the protection of personal information under its control.
FINTRAC is one of 13 federal departments and agencies that play a key role in Canada's Anti-Money Laundering and Anti Terrorist Financing regime.
The Centre's mandate is to ensure the compliance of businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations, and to generate actionable financial intelligence for police, law enforcement and national security agencies to assist in the investigation of money laundering and terrorist activity financing offences or threats to the security of Canada. The Centre acts at arm's length and is independent from the police services, law enforcement agencies and other entities to which it is authorized to disclose financial intelligence.
FINTRAC is headquartered in Ottawa, with regional offices located in Montréal, Toronto, and Vancouver. It reports to the Minister of Finance, who is in turn accountable to Parliament for the activities of the Centre.
Money laundering is the process used to disguise the source of money or assets derived from criminal activity. There are three recognized stages in the money laundering process:
- Placement involves placing the proceeds of crime in the financial system.
- Layering involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the trail and the source and ownership of funds. This stage may involve transactions such as the buying and selling of stocks, commodities or property.
- Integration involves placing the laundered proceeds back into the economy to create the perception of legitimacy.
The money laundering process is continuous, with new 'dirty' money constantly being introduced into the financial system.
Terrorist activity financing
Terrorist activity financing is the use of funds, property or other services to encourage, plan, assist or engage in acts of terrorism, where the primary motivation is not financial gain.
Two main differences distinguish terrorist activity financing from money laundering:
- Funds can be from legitimate sources, not just criminal acts; and
- Money is the means, not the end—the goal is to use funds to facilitate or implement terrorist activities.
Threats to the security of Canada
FINTRAC's role is to provide CSIS with financial intelligence to assist that agency in fulfilling its mandate of investigating threats to the security of Canada. Threats to the security of Canada are defined in the Canadian Security Intelligence Service Act as:
- espionage or sabotage that is against Canada or is detrimental to the interests of Canada or activities directed toward or in support of such espionage or sabotage;
- foreign influenced activities within or relating to Canada that are detrimental to the interests of Canada and are clandestine or deceptive, or involve a threat to any person;
- activities within or relating to Canada directed toward or in support of the threat or use of acts of serious violence against persons or property for the purpose of achieving a political, religious or ideological objective within Canada or a foreign state; and,
- activities directed toward undermining by covert unlawful acts, or directed toward or intended ultimately to lead to the destruction or overthrow by violence of the constitutionally established system of government in Canada, but does not include lawful advocacy, protest or dissent, unless carried on in conjunction with any of the activities referred to in paragraphs (a) to (d).
- and intelligence agencies.
Canada's anti-money laundering and anti-terrorist financing regime
FINTRAC occupies an important position in the constellation of organizations involved in Canada's fight against money laundering and terrorism. Each of these organizations has a particular relationship with FINTRAC. Due to the nature of its mandate, the Centre's work is situated at the beginning of a process that starts with the reports to FINTRAC by financial institutions and intermediaries. With the assistance of specialized automated tools, skilled staff analyze the reported transactions and information from other sources to extract financial intelligence that would be relevant to the investigation or prosecution of money laundering offences, terrorist activity financing offences, and threats to the security of Canada.
Money laundering and terrorist financing cases can be extremely complex, often involving many players implicated in transnational and covert illicit activity. The investigations are often time and resource intensive. For this reason, the time between FINTRAC's initial disclosure and the conclusion of an investigation can be quite lengthy.
FINTRAC's core product is case-specific financial intelligence. FINTRAC is also well situated to provide strategic intelligence about trends and typologies of money laundering and terrorist financing. Because money laundering and terrorist financing are almost always transnational in character, and because an important part of FINTRAC's role is to exchange information with like bodies in other countries, it is also well placed to provide a strategic overview from an international perspective.
The Centre has signed information exchange agreements with certain foreign FIUs worldwide, enabling it to provide financial intelligence to its counterparts that can be crucial to investigations of cases involving the international movement of funds. Equally, it can receive information from these FIUs, which is useful to its own analysis.
When FINTRAC is satisfied that it has reasonable grounds to suspect that the information would be relevant to such investigations or prosecutions, it discloses this financial intelligence to law enforcement and/or intelligence agencies. These agencies, where appropriate, conduct investigations, and if warranted, bring charges against the individuals involved. The recipients of the intelligence include the Royal Canadian Mounted Police (RCMP), provincial and municipal police agencies, CSIS, CRA, IRCC and foreign FIUs with which the Centre has a Memorandum of Understanding (MOU) for the exchange of information.
FINTRAC is also active in many initiatives aimed at fostering international cooperation at the policy level. Notable among these is its participation in the Egmont Group, where FINTRAC is engaged in the sharing of best practices and other activities designed to strengthen support for member countries' anti-money laundering and anti-terrorist financing regimes.
FINTRAC fulfills its mandate by engaging in the following activities:
- Receiving financial transaction reports and voluntary information in accordance with the PCMLTFA and Regulations;
- Safeguarding personal information under its control;
- Ensuring compliance of reporting entities with the PCMLTFA and Regulations;
- Maintaining a registry of money services businesses in Canada;
- Producing financial intelligence relevant to investigations of money laundering, terrorist activity financing and threats to the security of Canada;
- Researching and analyzing data from a variety of information sources that shed light on trends and patterns in money laundering and terrorist activity financing; and
- Enhancing public awareness and understanding of money laundering and terrorist activity financing.
In addition, FINTRAC is part of the Egmont Group, an international network of financial intelligence units that collaborate and exchange information to combat money laundering and terrorist activity financing.
FINTRAC also contributes to other multilateral fora such as the Financial Action Task Force (FATF), the Asia-Pacific Group on Money Laundering (APG) and the Caribbean Financial Action Task Force (CFATF), lending participation in international policymaking and the provision of technical assistance to other FIUs.
Privacy and protection of personal information
FINTRAC is subject to the Privacy Act, which strictly regulates how federal institutions can use and disclose personal information collected about individuals.
In addition, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act stipulates that FINTRAC is to ensure that the personal information under its control is protected from unauthorized disclosure. Any unauthorized use or disclosure of information is prohibited and can result in severe penalties, including a fine of up to $500,000 or up to five years' imprisonment.
The Act also sets out that information can only be disclosed to law enforcement where there are reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence or a terrorist activity financing offence, or to CSIS when there are reasonable grounds to suspect that it is relevant to threats to the security of Canada. Even in those circumstances, only "designated information" can be disclosed.
A financial transaction report is retained by FINTRAC for ten years. If it was not disclosed, it must be destroyed.
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