FINTRAC

1. FINTRAC Financial Transactions and Reports Analysis Centre of Canada August, 2001

2. Background • Previous Proceeds of Crime Legislation • Mandated record keeping for deposit-taking institutions • Voluntary reporting of suspicious transactions • System felt to be inconsistent and not in keeping with international requirements • New Proceeds of Crime (Money Laundering) Act • Received Royal Assent on June 29, 2000 • Broadens reach of previous system and implements mandatory reporting of suspicious and certain prescribed transactions

3. Key Principles of the Act • Detect and deter money laundering • Provide vital tools to law enforcement • Strike a balance between privacy rights and enforcement needs • Fulfill Canada’s international commitments in the fight against transnational crime

4. Reportable Transactions and Established Thresholds • Large Cash Transactions and International Electronic Funds Transfers of $10,000 or more • $10,000 reporting threshold established to ensure that ‘ordinary’ transactions of ‘average’ Canadians are not reported to FINTRAC • Suspicious Transactions • No monetary reporting threshold – ‘reasonable grounds to suspect that the transaction is related to the commission of a money laundering offence’ • Other Prescribed Transactions • Certain casino and foreign exchange transactions • Cross-border movements of currency or monetary instruments

5. Receipt of Voluntary Information • The Act enables FINTRAC to receive and use information related to a suspicion of money laundering that is voluntarily provided to the Centre from: • Law enforcement; the public; reporting entities; and other FIUs. • FINTRAC can also access public and commercial databases

6. Part 1 Regulations • Pre-published in the Canada Gazette February 17, 2001 for a 90-day comment period • Regulations will be phased in • Suspicious transactions – November 2001 • International electronic funds transfers – Winter 2001/02 • Large cash transactions and compliance regime requirements– Spring 2002

7. Part 2 Regulations - Cross Border Reporting • Requirement to report cross-border movements of large amounts of currency and monetary instruments to Canada Customs • Regulations pertaining to Part 2 of the Act are in development and are expected to be pre-published later this year

8. Financial Transactions and Reports Analysis Centre of Canada • Independent agency mandated to collect, analyze and disclose information to assist in the detection, prevention and deterrence of money laundering • Headquartered in Ottawa, with regional offices in Toronto, Montreal and Vancouver

9. FINTRAC’s Role in Efforts to Eliminate Money Laundering • Provide law enforcement with key intelligence and play a key role in the National Initiative to Combat Money Laundering • Enhance Canada’s domestic and international efforts in combating organized crime and money laundering • Contribute to the integrity of Canada’s financial infrastructure

10. Financial Transactions Reports and Analysis Centre of Canada • To fulfill this role, FINTRAC will: • Receive reports from reporting entities; • Analyze reported information; • Disclose suspicions of money laundering to enforcement agencies; • Ensure compliance with reporting requirements; • Undertake strategic research on issues related to money laundering; • Advise government on the nature and scope of money laundering; • Promote public awareness and provide feedback to reporting entities.

11. Compliance • FINTRAC is responsible for ensuring compliance • In addition to meeting the record keeping, client identification, and reporting obligations, reporting entities are also required to implement a compliance regime with the following elements: • Compliance Officer • Policies and Procedures • Training Program • Periodic Review

12. Guidelines • Stakeholders identified a need for guidelines – 4 were released with the pre-publication of the Regulations: • Background Information on Money Laundering • Suspicious Transaction Reporting • Submitting Reports to FINTRAC • Implementation of a Compliance Regime

13. Analysis of Information • Information will be housed in a highly secure computer facility to ensure data integrity and privacy • Will use state of the art technology to sift out unusual patterns of activities • Analysts will then provide the “human factor”

14. Disclosure • FINTRAC may only disclose information where there are reasonable grounds to suspect that it would be relevant to an investigation or prosecution of a money laundering offence • Designated or “tombstone” information will then be disclosed to the appropriate law enforcement agency • To acquire further information, law enforcement must obtain Production Order

15. Relationship with Law Enforcement • FINTRAC’s“raison d’etre” is to support the efforts of the law enforcement community • FINTRAC is sensitive to the heavy workload among enforcement agencies • Our goal is to provide high quality, useful disclosures that will assist law enforcement

16. Relationship with Law Enforcement • The Act requires FINTRAC to maintain an arms length relationship with law enforcement • Enforcement cannot access FINTRAC databases or task the Centre • Law enforcement can provide voluntary information to assist FINTRAC in determining relevance to a money laundering investigation or prosecution

17. Conclusion • FINTRAC is committed to: • Developing productive relationships with law enforcement, reporting entities, and international agencies; • Producing high-quality analysis and assessments about suspected money laundering to assist law enforcement; • Contributing to the fight against money laundering.