The U.S. Department of State has designated Canada a “major money laundering country” where foreign drug-trafficking gangs are exploiting weak law enforcement and soft laws.
The March 2019 report, which places Canada on a short list of countries vulnerable to significant drug money laundering transactions — such as Afghanistan, the British Virgin Islands, China, Colombia and Macau — underlines a number of threats reported over the past year in Global News investigations, such as the laundering of fentanyl-trafficking proceeds from China through British Columbia casinos, real estate and underground banks.
“Foreign-generated proceeds of crime are laundered in Canada, and professional, third-party money laundering is a key concern,” the report states. “Transnational organized crime groups and professional money launderers are key threat actors.”
The report says Canada is especially vulnerable to money laundering through casinos, real estate, money services businesses, currency exchanges, wire exchanges, offshore corporations, legal “funnel accounts” and bulk cash and hawala transactions — meaning international exchanges of credit and debt between criminal bankers without money actually crossing borders.
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The report notes weaknesses in enforcement and prosecution — caused partly by Canada’s privacy laws and loopholes that allow Canadian lawyers to not report suspicious transactions.
According to the most recent data, from 2010 to 2014, only 169 charges of money laundering led to convictions in Canada, the report says.
“Canada has a rigorous detection and monitoring process in place but should further enhance its enforcement and prosecutorial capabilities,” the report says. “When the magnitude of the identified money laundering risks are taken into account, Canada’s money laundering conviction rate appears to be low.”
The report notes that Canadian police do not have direct access to the databases of Fintrac, Canada’s financial intelligence agency. Fintrac collects data on suspicious transactions from entities such as banks and realtors (although realtors often do not comply with reporting laws, according to Fintrac).
But this cache of searchable information, which would help police identify suspects potentially involved in professional money laundering, can only be released in focused disclosures and if Fintrac deems it highly likely that crimes are taking place.
This has led critics to accuse Fintrac of being a good collector of unused criminal intelligence.
But Fintrac’s disclosures to law enforcement have improved somewhat since 2017, the report says, after amendments to Canada’s anti-money laundering laws.
Canada was also designated as a “major precursor country” for illicit narcotics and a source country for fentanyl.
“Canada continued to experience a growing number of opioids-related overdose deaths, with over 8,000 deaths since 2016,” the report says.
China is the major source of fentanyl trafficking to North America, but Canadian officials reported a decrease in the volume of fentanyl seized in postal transactions from China, according to the report.
Global News has reported, however, that some Canadian officials believe fentanyl trafficking from China is, in fact, getting worse because of increasing diplomatic disputes between the two countries.
No Canadian officials are believed to be involved in drug trafficking or money laundering, the U.S. report says.
WATCH (March 1, 2019): Timeline of money laundering in B.C. casinos
In China, “the Ministry of Public Security takes allegations of drug-related corruption seriously and launches investigations when deemed appropriate,” according to the report.
Last week, B.C.’s government asked the federal government for the majority of resources from a new money laundering commitment.
B.C. Attorney General David Eby met with Federal Minister of Border Security and Organized Crime Reduction Bill Blair in Victoria on Wednesday.
“It’s an international issue, which calls for a strong, committed provincial partner, which we are,” Eby said. “We are here and ready to work with the federal government to address it.”
The federal government proposed a new anti-money laundering task force in the federal budget to crack down on real estate-, casino- and trade-based money laundering, especially in high-risk areas such as Vancouver, Toronto and Montreal.
The plan includes investments of about $200 million in five years and additional ongoing funding, a response to “growing concerns” that transnational organized crime and professional money laundering networks are flooding illicit funds through Canadian real estate, corporations and trade, budget documents say.
© 2019 Global News, a division of Corus Entertainment Inc.