Enforcement Efforts to Deter
Money-Laundering
CANADIAN MONEY LAUNDERING LAWS
AND PROGRAMS
Bill C-61establishes the criminal offense of "money laundering";
strengthens the ability of law enforcement to prosecute crimes
involving the laundering of funds; establishes procedures to allow
law enforcement to seize and freeze alleged proceeds of crime and
establishes procedures to allow authorities to obtain forfeiture
of property that is acquired with the proceeds of crime.
In Canada, an offender may be imprisoned for a term of up to 10
years and upon conviction, the Court may order the forfeiture of
any property derived through the use of illegal proceeds.
This applies to anyone (e.g. financial institution or employee)
who deals with any property with an intent to conceal or convert
the property, and has knowledge that all or part of property is
derived from an Enterprise Crime Offence (ECO) or Designated Drug
Offence (DDO).
"Enterprise Crime Offence" and "Proceeds of Crime" in
this context relate to proceeds obtained or derived directly or
indirectly as a result of an offence against any of 24 provisions
in the Criminal Code (e.g. arson, bribery) or against section
354 of the Criminal Code (possession of property obtained
by crime) or being an accessory after the fact, in relation to,
or any counseling in relation to, any of the above.
New Financial Transactions and
Reports Analysis Centre of Canada
Legislation will establish an independent government body, to
be known as the Financial Transactions
and Reports Analysis Centre of Canada, which will be a central
repository for information about money laundering activities across
Canada.
The Centre will operate independently from law enforcement agencies,
and the disclosure of information by the Centre will be strictly
controlled. They will be authorized to provide key identifying
information of suspicious transactions (e.g., name, date, account
number, value of the transaction) to the appropriate police force
if they have reasonable grounds to suspect that the information
would be relevant to investigating or prosecuting a money laundering
offence.
Reporting
Each financial institution has a senior officer responsible for
anti-money laundering processes. In addition, an officer at each
branch that deals directly with customers must be responsible for
ensuring that money laundering deterrence and detection procedures
are in place.
The Proceeds of Crime Act and Regulations require
the completion and retention of a "large cash transaction
record" for any receipt of cash in the amount of $10,000 or
more for a period of five years.
Some examples of cash transactions are cash deposits; any request
to purchase, for cash, travelers cheques or drafts; any request
to transmit cash to some other branch or financial institution
in or outside Canada.
Regulated financial institutions, casinos, currency exchange businesses,
as well as other financial intermediaries (such as lawyers and
accountants), will be required to report any financial transactions
that they have reasonable grounds to suspect are related to a money
laundering offence. It is proposed that cheque cashers, money order
vendors; and money transmitters be required to provide reports
as well.
The maximum penalties for failing to report suspicious financial
transactions under the Bill include fines of up to $2 million and
imprisonment for up to five years. People are exempt from civil
or criminal liability arising from the disclosure of information
regarding suspicious transactions to law enforcement authorities,
which in turn should be reported to the Local Proceeds of Crime
Section of the Royal Canadian Mounted Police without delay.
Sample
of Declaration Required
I/we declare that the source of funds for the above transaction is as
follows:
Consent is hereby given to this financial institution to disclose this
transaction to law enforcement authorities.
Client Signature Prepared By (Signature, Title)
Authorized Officer (Signature, Title) Date
Reporting of Large Cross-border Movements
of Currency
Individuals and entities that import, export or transport large amounts
of currency or monetary instruments across the Canadian border will be
required to report such activities to a Canada Customs officer.
The United States requires persons transporting currency or monetary
instruments over US $10,000 to file a report with U.S. Customs. It is
proposed that C $15,000 be adopted for Canada and include traveler's
cheques and other bearer instruments such as money orders, personal and
cashier cheques and securities.
Canada Customs will have the authority to retain currency or monetary
instruments for a prescribed period of 70 days before they are considered
to be forfeited to the Crown.
The regulations provide for the mandatory return of the seized currency
or monetary instruments on payment of a prescribed penalty, unless the
officer suspects the currency is proceeds of crime. The prescribed penalty
for non-reporting, when there is no reasonable suspicion of money laundering,
would have fixed penalties ranging from $250 to $1,000, depending on
the circumstances, including whether the person is a repeat offender
or not.
Use of $1000 Bills
Large-value bank notes make it easier to conceal large sums of money
for movement inside and outside the country. Compared to all other
denominations, $1000 notes are disproportionately used for money laundering. Removing
the $1000 note from circulation will make it more difficult for this
illicit activity to take place.
There are about 3.8 million $1000 Canadian bank notes in circulation.
This accounts for less than one-third of one per cent of the total number
of notes in circulation but represents about 10% of the value of all
currency in circulation.
Existing Canadian notes will gradually be withdrawn from circulation
but individuals will still be free to hold and use those $1000 notes
that remain in circulation. They will retain their status as legal
tender for their full face value.
AMERICAN MONEY LAUNDERING LAWS AND PROGRAMS
Money Laundering Control Act
The Money Laundering Control Act (MLCA) makes money laundering
a federal offense, punishable by prison sentences of up to 20 years.
The intent of the MLCA is to authorize forfeiture of
the profits earned by launderers; to encourage financial institutions
to come forward with information about money launderers without fear
of civil liability and to provide Federal law enforcement agencies
with additional tools to investigate money laundering.
Bank Secrecy Act
The title of the Act is misleading, as its main purpose
is to limit, rather than to enhance, secrecy regarding certain financial
transactions. The Bank Secrecy Act (BSA) requires private individuals,
banks and other financial institutions to provide Currency Transaction
Reports (CTRs) on cash transactions greater than $10,000, to report
suspicious transactions and to implement anti-money
laundering programs.
The Financial Crimes Enforcement Network (FinCEN), an agency of the
United States Department of the Treasury uses data-mining techniques
to identify targets for investigations of money laundering and other
financial crimes.
They process approximately 200,000 reports a week on large currency
transactions. Those reports are analyzed using link analysis to establish
whether there are related transactions that may indicate suspicious activity.
These linked reports are combined with additional information from law
enforcement and Treasury records along with additional analytical tools
to eliminate legitimate activities.
Training Programs
Financial crime is complex, and the investigation of
financial crime requires highly trained investigators with special
skills.
Training programs to combat them include the FBI's white collar and
financial fraud program, FLETC's international banking and financial
fraud institute program, IRS Criminal Investigations
Division training on money laundering and financial fraud, the DEA's
drug money laundering investigations, FINCEN's initiatives to establish
Financial Investigative Units (FIUs), and the US Secret
Service programs in credit card fraud and counterfeiting.
Treaties and Agreements
Mutual Legal Assistance Treaties (MLATs) allow generally for the international
exchange of evidence and information in criminal and related matters.
In money laundering and asset forfeiture cases, they can be extremely
useful for exchanging banking and financial records.
Financial Information Exchange Agreements (FIEAs) facilitate the exchange
of currency transaction information between the U.S. Treasury Department
and the finance ministries of other governments.
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