Audits of major national security programs raise concerns for privacy

OTTAWA, November 17, 2009 — The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has more personal information in its database than it needs, uses or has the legislative authority to receive.

This was one of the key findings of the Privacy Commissioner of Canada’s in-depth audit of the independent agency mandated to analyze financial transactions and identify suspected money laundering and terrorist financing in Canada.

Money Laundering and Terrorist Financing in the Securities Sector

The securities sector is one of the core industries through which persons and entities can access the financial system, providing opportunities for criminals to misuse the financial system.
This FATF study describes (i) how criminals might be able to use securities firms to launder money and finance terrorism and (ii) how illicit funds can be generated through fraudulent activities.

Risk-based Approach: Guidance for the Life Insurance Sector

The FATF has agreed to the guidance paper for the life insurance sector on applying a risk-based approach to combating money laundering and terrorist financing.
The risk-based approach guidance is the result of a joint FATF-private sector project to develop a series of sector-specific guidance papers.

FINTRAC issues administrative monetary penalties against two entities

The Financial Transactions and Reports Analysis Centre of Canada has assessed administrative monetary penalties against two entities. The penalties were imposed for violations of the Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA).

FINTRAC has had the authority to issue administrative monetary penalties in response to non-compliance with the PCMLTFA and related regulations since December 30, 2008. Penalties are used as a last recourse after other measures to ensure compliance with the law have been exhausted. This is the first time that FINTRAC has used this authority to assess such penalties.

FinCEN Seeks Comments on AML Plan for Non-Bank Mortgage Lenders and Originators

On July 15, 2009 the U.S. Financial Crimes Enforcement Network (FinCEN) issued an advance notice of proposed rulemaking (ANPRM) to solicit public comment on a wide range of questions pertaining to the possible application of anti-money laundering (AML) program and suspicious activity report (SAR) regulations to non-bank residential mortgage lenders and originators.
In FinCEN’s recently issued mortgage fraud reports, SAR analysis showed non-bank mortgage lenders and originators initiated many of the mortgages that were associated with SAR filings.
Written comments on the ANPRM must be received on or before August 20, 2009.

Change to FINTRAC’s Electronic Funds Transfer Requirements

A change to the requirements relating to electronic funds transfers (ETFs) came into effect on June 23, 2009. These requirements apply to financial entities, money services businesses and casinos.
Outgoing EFTs sent within Canada, including SWIFT MT 103 messages, must include originator information. This means the name, address, account number and reference number (if applicable). In the case of the incoming EFTs, reasonable measures are required to ensure that the EFT includes the originator information. Previously, this requirement was conditional on the EFT network having the capability to include originator information. Effective June 23, 2009, this condition no longer applies.
For more information, see Guideline 6 for financial entities, money services businesses, or casinos.

Freezing of Terrorist Assets: FATF Releases New Best Practices

The Financial Action Task Force has issued best practices to assist countries with their implementation of measures to freeze terrorist-related funds or other assets without delay pursuant to relevant United Nations Security Council Resolutions and in accordance with the FATF Standards. These best practices will help countries to develop and implement targeted financial sanctions to prevent and suppress terrorist financing. This document replaces the International Best Practice – Freezing of terrorist assets issued in 2003.