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Speaking points for Sarah Paquet, Director and Chief Executive Officer, Financial Transactions and Reports Analysis Centre of Canada at the ACAMS Assembly Canada Conference

From: Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)


Toronto, Ontario

November 16, 2023

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I want to acknowledge that I am speaking to you from the traditional territory of many nations, and what is now home to many diverse First Nations, Inuit and Métis peoples.

There’s never been a better time for such a knowledgeable group of leaders and practitioners – from across the public and private sectors – to come together to discuss the ever-evolving threats we face and to find collaborative solutions to address them.

This is a defining moment for Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime and our collective efforts in combatting money laundering and terrorist financing:

One thing is clear: as we look to the future, the status quo is not an option.

I want to take a moment to touch on some of the critical results that we are achieving for Canadians. It’s important to celebrate and build on our successes. It also serves as a reminder of what’s at stake and why we need to come together in this fight against money laundering and terrorist financing.

My primary focus today is on how we’re modernizing FINTRAC to meet the challenges – and leverage the opportunities – of the future. This includes transforming our systems, our processes and our approaches so that we can better support the AML/ATF efforts of Canadian businesses across the country, and more effectively contribute to the investigations of Canada’s law enforcement and national security agencies.

Strengthening and expanding our partnerships will be critical to FINTRAC’s modernization, and to enhancing our collective ability to combat money laundering and terrorist financing. More than ever, it takes a network – a strong, equipped and committed network – to defeat modern criminal and terrorist networks.

Results for Canadians

In late September, the RCMP, working in cooperation with U.S. Homeland Security in Buffalo, New York, recognized FINTRAC’s contribution to Operation Heinze, a 16-month investigation that resulted in the arrest of an individual in possession of 433 kilograms of cocaine that was destined for Canada. Believed to be the largest cocaine bust in the history of western New York, this operation resulted in multiple charges for, among other things, participating in activities of a criminal organization and money laundering.

It’s not hard to imagine the harm that these and the other drugs that were seized would have done in our communities and to our most vulnerable citizens.

Over the past year, our financial intelligence supported nearly 300 major, resource intensive investigations and many hundreds of other individual investigations at the municipal, provincial and federal levels across the country, and internationally.

Our financial intelligence is critical to law enforcement and national security investigations. Many of the recipients of our disclosures have told us that they will not start a major project-level investigation without seeking out our intelligence. And 96% of the feedback that we received last year indicated that our financial intelligence was both valuable and actionable.

The results that we have been able to achieve would not have been possible without the dedicated efforts of businesses across the country. I want to recognize and thank you for helping to protect Canada and Canadians.

We are committed to working with businesses across the country to assist them in understanding and complying with their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.

To this end, we’ve expanded our communications with businesses over the past year, including:

While our priority is to work with businesses to help them comply with their obligations, we’ll also be firm in ensuring that they do their part, and we’ll take appropriate action when it is needed.

Combatting money laundering and terrorist financing should never be viewed as a cost centre or an expense. And our collective efforts must not fall victim to economic challenges or downturns. Confronting these crimes is a moral and social imperative.

All of us in this room today know that crimes here in Canada and across the globe are committed primarily for profit. And these crimes – whether it’s drug trafficking, fraud, human trafficking, or online child sexual exploitation – threaten our communities and our most vulnerable citizens. They are not victimless crimes.

In the case of human trafficking for sexual exploitation, the traffickers target Canada’s most vulnerable citizens, with the majority of victims being women under the age of 25, including minors.

Earlier this year, FINTRAC’s assistance was recognized by Ontario’s Human Trafficking Intelligence-led Joint Forces Strategy, which includes the Ontario Provincial Police, Toronto Police Service, Greater Sudbury Police Service and Treaty Three Police Service. As a result of their 65 investigations since 2021, more than 230 charges were laid against 28 people. The victims ranged from 12 to 47 years old.

Beyond the risk to Canadians, money laundering undermines the integrity of our financial system and harms Canada’s legitimate economy, which our businesses rely upon: it distorts market prices, creates unfair competition and damages the reputation of our financial sector.

More broadly, money laundering fosters corruption and leads to the erosion of public institutions and the rule of law, lower government revenues and a loss of credibility and influence internationally.

Terrorists and those supporting terrorism also look to exploit Canada’s financial system to facilitate their devastating activities. Whether it’s individuals engaged in ideologically motivated violent extremism here in Canada, extremist travellers or international terrorist groups, we have seen how they move their money to facilitate their terrorist activities.

Businesses must understand the risks and vulnerabilities to which they are exposed – that is, the ways in which their products and services can be used to launder the proceeds of crime or finance terrorism.

And it’s imperative that they comply with their legal obligations. Compliance deters criminals and terrorists from operating in the legitimate economy. It also ensures that we receive the information we need to generate actionable financial intelligence to help target, disrupt and dismantle the organized criminal and terrorist networks that threaten Canadians.

As we look at compliance across sectors, some of our businesses are not where they should be. I’m not referring to minor technical deficiencies that some like to speak of. I’m talking about serious deficiencies; in some cases, it’s a lack of reporting of obvious suspicious transactions – transactions related to heinous crimes that have made the headlines across the country – and other threshold reporting that is essential to our financial intelligence mandate. We’re also seeing foundational weaknesses in the governing frameworks of AML/ATF programs.

This is not acceptable and we are actively stepping up our enforcement action in these cases and all cases that go to the heart of protecting Canada and Canadians. We will confront those businesses that are not meeting their moral and social responsibilities. And, when we do so, we will be more open and transparent about the nature of their violations.

FINTRAC’s modernization

We must work together – deliberately and systematically – to address the emerging and evolving threats in the anti-money laundering and anti-terrorist financing landscape. At FINTRAC we’re doing our part – this is the driving force behind our focus on modernization.

We’re committed to establishing FINTRAC as a world-leading financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor fully capable of operating in an ever-changing world. To do this means the ability to work in real-time. That is our vision: FINTRAC in real-time.

This means harnessing modern skills, tools and technologies to be able to identify, assess and communicate risk in real-time; to support and respond to businesses in real-time; to receive reporting in real-time; to conduct our analysis in real-time; and to generate financial intelligence for law enforcement and national security agencies in real-time or as close to it as we can get.

Take our work in combatting human trafficking for sexual exploitation, for example. Being able to work in real time – particularly as it relates to reporting by businesses and our intelligence analysis – would be nothing short of a game-changer.

It would allow us to proactively identify and disrupt networks much quicker. This would mean rescuing victims sooner, saving them from prolonged abuse. It would mean supporting survivors sooner, getting them the assistance they need in a more timely fashion. And it would help law enforcement target, arrest and charge the human traffickers sooner, preventing the abuse of new victims.

Central to our vision for modernization, we’re shifting more fully towards an enhanced risk-based approach, modernizing and evolving our supervisory framework beyond measuring ‘technical compliance’ to promoting risk awareness, risk identification and effective risk mitigation.

This evolution within our Supervision sector will see us move from regional management to enterprise management, where our end-to-end operations will be delivered through sector-specific streams.

With this change, we’re tailoring our approaches to better meet the needs of our businesses – in the form of services, support and tools that make it easier for them to identify and mitigate money laundering and terrorist financing risks, and meet legislative requirements.

For example, our shift to risk-based supervision means providing businesses with ease of access to FINTRAC in order to upload and share reporting information. We should be able to access a business’s data quality and timeliness and provide immediate feedback if there are anomalies in the rate or quality of reporting.

With our innovative Digital Strategy, we’re focused on advancing Centre-wide digital automation, analytics and the use of artificial intelligence. We’ve created a new digital acceleration and modernization team that will allow us to experiment with, and exploit, the latest technologies.

With our focus on modernization, we’re looking to leap ahead from a technical, process and culture perspective so that we can stay ahead of the bad actors, find new and meaningful ways to collaborate with our partners and continue to deliver value and results in an ever-changing world.

Our vision is aspirational and will require legislative and regulatory change as well as investment by FINTRAC and businesses in available and advancing technologies. But it has to be the future of our anti-money laundering and anti-terrorist financing efforts if we want to be able to protect Canada and Canadians in the years and decades to come. As I said earlier, status quo is not an option – we will become irrelevant in the face of emerging technologies.

Partnership is critical

As it is with all of our anti-money laundering and anti-terrorist financing efforts, partnership will be key to the modernization of FINTRAC and Canada’s broader AML/ATF Regime. And partnership has become a real strength of Canada’s Regime.

We’ve worked together to implement a range of legislative and regulatory changes in recent years that have, and that are, significantly improving our AML/ATF efforts and our ability to protect Canada and Canadians.

We’ve worked together, in collaboration with the global Finance Against Slavery and Trafficking (FAST) Survivor Inclusion Initiative, to support survivors of human trafficking as they work to regain their financial freedom.

In partnership with the Financial Consumer Agency of Canada and the banking sector, we developed new guidance to financial institutions in relation to identifying clients who, as survivors of human trafficking for sexual exploitation, may have had their financial identities or banking products hijacked by their traffickers, ruining their credit record and complicating their financial reintegration and independence.

Our new guidance is helping prevent the re-victimization of the survivors of this appalling illicit activity by facilitating their access to basic banking services and products that are so fundamental to our daily lives.

We’ve worked together on a range of innovative public private partnerships that are led by Canada’s major banks and include law enforcement, FINTRAC and a number of key stakeholders both domestically and internationally.

Last year alone, we were able to generate more than 550 disclosures of actionable financial intelligence for Canadian law enforcement agencies in relation to these collaborative projects aimed at combatting human trafficking for sexual exploitation, online child sexual exploitation, the trafficking of fentanyl, illegal wildlife trade and other heinous crimes.

We’ve also worked together to explore a number of important issues, including enhanced information sharing in, and between, the public and private sectors, strategic partnerships with industry in relation to RegTech advancements, and the possibility of leveraging existing systems and emerging technologies to expand the reach and efficiency of our collective efforts.

As we anticipate the start of the parliamentary review, there is no better time for Canada’s anti-money laundering and anti-terrorist financing network to come together to collectively modernize our structures, approaches and technologies so that we can stay ahead of modern criminal and terrorist networks – and better protect Canada and Canadians.

As a call to action, I sincerely hope that you will join us on this journey. We cannot truly get to where we need to go as an organization, as an AML/ATF Regime or as country without you.

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