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FINTRAC NEEDS TO CHANGE ITS GUIDANCE AS SOON AS POSSIBLE AS IT IS OUTDATED!

FINTRAC NEEDS TO CHANGE ITS GUIDANCE AS SOON AS POSSIBLE AS IT IS OUTDATED!

Here is what FINTRAC continues to have in its Guidance as of May 11:

https://www.fintrac-canafe.gc.ca/guidance-directives/overview-apercu/Guide1/1-eng

 

I predict that FINTRAC will be changing its website because it is missing a new (but not all that new) and important component of the money laundering offence in Canada. It is troubling that despite the fact that the Criminal Code changed nearly a year ago, FINTRAC has not updated its Guideline 1: Backgrounder description in which it describes what it considers money laundering to be in Canada. The Guideline makes no mention of “reckless” as a way to commit money laundering.  And as a result of this gap, it provides no Guidance on how this is going to be dealt during evaluations and what will be expected of reporting entities.

A search for “RECKLESS” turns up a single result from the FINTRAC website.

https://recherche-search.gc.ca/rGs/s_r?st=s&s5bm3ts21rch=x&num=10&st1rt=0&langs=eng&cdn=canafefintrac&hq=&q=reckless&wb-srch-sub=#wb-land

 

A review of this single result reveals a document that is for the most part accurate, but it just does not emphasize enough the fact that the offence itself has changed.  The search result leads one to the speaking notes of Nada Semaan , Director and Chief Executive Officer of FINTRAC for the 2019 Casino Forum on December 10, 2019, which includes a single reference to “reckless”:

“Legislative changes were announced, including the addition of recklessness to the offence of money laundering in the Criminal Code. This criminalizes the activity of moving money on behalf of another person or organization while being aware that there is a risk that this activity could be money laundering.

https://www.fintrac-canafe.gc.ca/new-neuf/ps-pa/2019-12-10-eng

 

 

Kudos to Neda Semaan for being right on top of this issue but it is concerning that staff have not translated this reality into the Guidance.  The gravity of this change is simply not being brought home to the public or to reporting entities who have obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.

The quoted passage could be restated more clearly to truly capture the seriousness of the change to read (emphasis added):

 

“Legislative changes were announced, including the addition of recklessness to the offence of money laundering in the Criminal Code. This means that in Canada it is now money laundering to move money on behalf of another person or organization while being aware that there is a risk that this activity could be money laundering.

 

Let’s hope we see Guidance on this soon and at the very least an update to Guideline 1: Backgrounder.

In the interim, every CAMLO should be developing a plan to deal with the change and engaging with FINTRAC to determine whether existing measures are sufficient to address this change or whether a change in approach is needed.  I suggest that at the very least:

  1. The new offence must be incorporated into the Risk Based Approach of every reporting entity; and
  2. Every reporting entity must properly train all staff who receive AML training, in a way that is tailored to their role and engage with how the change may materially alter their work and obligations under the PCMLTFA/R.

In order to help, I am providing a series of 12 short and focused educational webinars on this and other complex AML topics.  Session 4 will take place on Saturday May 16, 2020 and will specifically address the effect of the inclusion of “recklessness” into the Canadian Criminal Code offence of money laundering (s. 462.31).

Brief outline of this Saturday’s webinar:

We all know about Placement, Layering and Integration.  For the most part this is about property or proceeds derived or obtained directly or indirectly from the commission of a predicate indictable (serious) offence.

But does the money always have to be “dirty”? This Saturday join me for an in-depth webinar on how, for the purpose of identifying Suspicious Transactions, Canadian law does not require the proceeds or property to be obtained or derived from a criminal offence.

In Canada the criminal offence of money laundering law changed significantly in June 2019. There are more regulatory changes coming and the existing regulations are all affected by any change in the substantive underlying offence.  It is, after all, along with the terrorist activity financing offence, the bedrock on which the regulatory regime is built.

Are you ready to deal with this change and as importantly, are your managers and front-line staff? Join me on Saturday May 16, 2020 for a brief review of this complex area of the Canadian anti-money laundering landscape.

Register here:

 

https://us02web.zoom.us/webinar/register/3815892898623/WN_VKyFzXFOTZCREY9ThyauRQ

 

 

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