Fintrac, the Canadian Financial Intelligence Unit has been publicly lambasted for collecting too much data on Canadian citizens who have no involvement in nor are they suspected of participating in financial crime.
A review of the reports sent to Fintrac by Canadian financial institutions, casinos and other regulated entities shows far more usual transactions such as deposits for homes, loans and wire transfers between family members. Many were the subject of Currency Transaction Reports (CTRs) because they hit the CD$10,000 reporting threshold, which is itself a throwback from the 1977 introduction of the US Bank Secrecy Act. Back in 1977, US$10,000 was the average annual salary of a US citizen so any transaction worth more than that would be worth investigating. Today, the limit is meaningless, when US$10,000 could be the equivalent of someone’s monthly paycheck.
Aside from swamping banks with overly onerous information gathering projects which leads to ridiculous filings (one bank in Canada reported a cash deposit of CD$570 in small denomination bills from a shop-owner) a tough reporting regime stamps on civil liberties and renders national anti-money laundering (AML) programmes ineffective.
CTRs and suspicious transaction reports (STRs) sent to Fintrac contained irrelevent information – tax bills, medical reports, employee training records – and not enough relevant information, such as the reason for suspicion, the national Privacy Commissioner told Parliament.
Perhaps it is time to get back to basics. There are legions of dedicated, smart people working in AML, who are using the knowledge, skills and wits to work with a financial system that is often adverse to playing by the rules, and regulations which no longer reflect the reality of financial crime.
Would anyone be prepared to give me a confidential, insider comment on how they think AML systems are working or not working? I vow not to share your email addresses with anyone else, not even the NSA. Send me a message via this page and I will get back to you.
PS -I’ll be adding a donations button to Financial Crime Asia in the near future. Thank you in advance for your support.