All flash and no (illicit) cash. That was the key takeaway from the Cullen Commission‘s final report looking at BC’s money laundering problem. Despite Canada talking a big game on anti-money laundering, its policies are ineffective. The Commission condemned federal anti-money laundering resources, and found Canada ignored the province’s calls for help. Austin Cullen, who led the Commission, concluded Federal resources aren’t reliable. The Province should therefore establish its own dedicated anti-money laundering enforcement team.
Canada’s Anti-Money Laundering Plan Is Mostly Just For Show
Canada dedicates significant resources to anti-money laundering, but they’re just for show. They might as well not exist, as the intentional complexity introduced makes them useless. It’s like they were designed to catch no one.
The Commission warns, “Over the past two decades, the federal government has enacted increasingly complex legislation aimed at addressing money laundering activity. However, serious questions have been raised about the effectiveness of that regime in relation to money laundering in the province of British Columbia.”
Canada’s anti-money laundering watchdog FINTRAC hasn’t been much help. According to the Commission, FINTRAC received 31 million reports in the 2019-20 money laundering season. During that period only 2,057 were referred to law enforcement and just 355 to BC law enforcement. We’ve pointed this out before — this isn’t a one-time issue but a longer-term trend despite more resources and reports. The commission points out Canada submits 12.5x more reports per capita than the United States.
Canada’s Anti-Money Laundering Agencies Aren’t Reliable
Even worse, almost no laundering is ever pursued. The Commission found only two major investigations from 2015 to 2020 in BC. “There was no sustained effort to investigate money laundering activity in British Columbia,” reads the report.
The report repeatedly references BC requesting more help from the Federal Government. Unfortunately, those requests were largely ignored. It was an open secret, but calls for help went unanswered.
The Commission provided significant criticism of Canada’s anti-money laundering resources. At one point they even condemned the anti-money laundering intelligence agency.
“Law enforcement bodies in British Columbia cannot rely on FINTRAC to produce timely, useful intelligence about money laundering activity that they can put into action,” remarks Cullen.
BC Should Establish Its Own Anti-Money Laundering Watchdog
BC might take charge of its own future if a key recommendation is followed. “I therefore recommend the creation of a dedicated provincial money laundering intelligence and investigation unit to lead the law enforcement response to money laundering in this province,” suggests Cullen.
The new unit would serve two key roles: 1) identifying, investigating, and disrupting sophisticated money laundering, and 2) training and supporting other investigators in the investigation of the money laundering and proceeds of crime.
Establishing its own anti-money laundering team won’t be cheap, but may not cost a lot. The commission suggests a significant portion may be recovered through asset forfeiture.
Due to limits of the inquiry, it couldn’t make Federal recommendations. That’s understandable but unfortunate considering transnational money laundering is, well, not a provincial issue. Stopping the flow of illicit cash within a province would be extremely difficult. At the same time, illicit cash flows where it has the least resistance. Only stopping it in BC means the laundering just moves provinces.
A Transparency International analysis we had the pleasure of helping with, revealed billions in anonymous cash flowed into Greater Toronto real estate. As we’ve pointed out before, even a little money laundering can have a big impact on real estate prices. It can distort the whole comp system.
One would assume a provincial inquiry would pique Canada’s interest without recommendations. However, for some odd reason it hasn’t. Canada was actively disassembling more financial crime resources during the inquiry.