Canada’s inability to impose legal consequences related to money laundering investigations frustrates experts who say the authorities can and must do more to fix the shortfalls in federal financial crime law.
“Obviously, there’s a serious problem with federal criminal law that allows this conduct to continue in our province,” Eby said on March 2.
It’s a bad look for Canada, says anti-money laundering consultant Matt McGuire.
“It’s incredibly frustrating to read [about] the amount of money that’s spent on the regime, the amount of money that was spent on the [Cullen] inquiry, the amount of money that reporting entities spill every year to try to comply with a Byzantine set of rules. The outcomes still aren’t there,” McGuire told The Epoch Times.
“We have two fundamental, big problems. Problem number one is, structurally it’s difficult to prosecute. And then second, even if that were fixed, we haven’t gotten enough boots on the ground to get this done.”
In his 15-page decision, Considine said the biggest problem was establishing “beyond reasonable doubt” that the money laundered was illegal.
“The Crown’s theory would be that X was operating an MSB. Because he had not registered this MSB as required by the PCMLTFA, his business was illegal. As such, the cash received into and paid out of X’s unlicensed MSB became tainted with criminality by virtue of having passed through an unlawful enterprise.”
Considine said there was no legal precedent in Canada to confirm judges would see it that way, despite the evidence painting “a highly suspicious portrait.” Precedents in the UK suggested judges would view the MSBs as simply being unlicensed and not inherently illegal. Therefore, prosecution would be a costly endeavour likely to fail.
McGuire said the case would be hard to win, and at the same time could not afford to be lost.
“Losing, I think, would make it even more clear to criminals that money laundering is a light touch in Canada,” McGuire said.
Track Record
The RCMP made a similar look into B.C.’s money-laundering problem through its “E-Pirate” probe, which began in 2015. The Public Prosecution Service of Canada pressed charges, only to have them stayed in 2018.Project Fisk, an investigation by a joint Edmonton Police Service and Canada Revenue Agency task force, took an in-depth look at the empire of an inner-city landlord. Detective Dan Behiels recommended 19 criminal charges be laid in 2021, but Alberta prosecutors declined, citing inadequate evidence and lack of public interest.
Behiels felt so strongly on the issue, he leaked a USB of the files to the CBC, leading to his suspension and to disciplinary charges.
McGuire said he was shown the contents and thought the evidence was strong.
“This just jumps off the page,” he said, noting that the case would be a lot of work and need to involve forensic accountants and “trying to convince a jury of some very complex issues, but it’s not insurmountable.”
Money laundering has long been a problem in Canada, with estimates ranging from $46 billion to as high as $130 billion annually.
“It’s hard to think about how the problem can persist this long unabated,” McGuire said.
“We’re not really making much in the way of headway in dealing with these problems. What we’ve done, quite successfully, is increase the layers of bureaucracy,” Iafolla said in an interview.
“I’m not sure that there’s a genuine 100 percent fix that we'll ever be able to get to, but certainly there are things that we can do to bring this problem under control.”
Iafolla, however, notes that assurances to handle illegal money issues were also made when the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) was founded in 2000. She says a dismal track record following government promises have left her “cynical” that special prosecutors and new agencies offer only the appearance of solutions, but not results.
McGuire believes civil forfeiture holds promise due to its lower threshold for success, and more resources in that direction could yield results.
“Civil processes have to step in far earlier. We can’t be bound to ‘beyond a reasonable doubt’ because it’s too high a standard,” he said.
“Go after the houses, the cars, the offence-related property—use those provisions to deprive them of the means to persist with those crimes. You can put as many people in jail as you like, but if the crime is still profitable, more people will stream in.”
Iafolla says sustained attention and resources from government are vital.
“These problems need specialized knowledge, they need specialized teams, they need dedicated time, they need resources, they need investigators who are not overwhelmed with casework,” she said.
“They need people who aren’t going to be poached by the private sector for more money to do the actual technical work that financial crime requires.”
