Review of the FATF Standards

The Financial Action Task Force (FATF) develops and promotes global standards for combating money laundering and terrorist financing, which are set out in the FATF 40 Recommendations and the 9 Special Recommendations on Terrorist Financing. Now at the end of its 3rd Round of Mutual Evaluations, the FATF is conducting a review of the 40+9 Recommendations to ensure that they remain up-to-date and relevant and to benefit from lessons learned from implementing and evaluating the current standards. The current review is a focused and balanced exercise, aiming at maintaining the necessary stability in the standards while addressing any deficiencies or loopholes.

Between October 2010 and January 2011, the FATF undertook a public consultation on the first phase of its Review of the FATF Standards.  The responses received were published on the FATF website in February 2011. In summary, 51 written submissions were received from representatives of the financial sector (available as Part 1 and Part 2); 18 from representatives of the non-financial businesses and professions; and 6 from other respondents, including non-governmental organisations.

The FATF has begun to consider the issues raised during the initial consultation. In particular, it continues to review certain aspects of the proposals relating to the risk-based approach, customer due diligence, wire transfers and politically exposed persons, taking into account comments received during the consultation process.

Royalty fraud

Certain industries are more susceptible to royalty fraud, but investigating and proving it is a challenging process. Whether a client wants to call it a fraud investigation or just a review, the key to this kind of assignment is to know how payments are supposed to be recorded and every possible trick or mistake that can result in underpayments. In other words, give every file the royal treatment. Read the article “Royal Treatment” in CAmagazine online.

A steep price - taking bribery more seriously

With the OECD pressuring Canada to get tougher on improper payments, days of bribes to foreign public officials may be over. While it seems apparent that countries such as Canada and the UK are finally following the US’s lead and taking bribery more seriously, this comes at a time when companies that are affected by the legislation may not be ready. A survey of UK companies released by Grant Thornton LLP in June 2010 found that more than three-quarters of companies surveyed have not invested in anticorruption strategies to deal with the Bribery Act, leaving many UK companies at unnecessary risk of the act’s harsh penalties. In addition, results “from a recent survey performed by a global business consulting firm discovered that only 50% of senior corporate executives are ‘highly confident’ that their business control systems are managing their organizations’ business risks effectively,’ ” says William Olsen, a principal of Grant Thornton LLP in the US and author of The Anti-Corruption Handbook: How to Protect Your Business in the Global Marketplace. The survey also showed that fewer than 10% rated their control systems “excellent” in providing early warning signs to catastrophic risk. (Read the full article called "A steep price" in CAmagazine online.)

FINTRAC Presentations and Speeches - March 8, 2011

With the recent adoption of Bill C-9, FINTRAC is now permitted to use tax evasion as a predicate offence from which to build a case disclosure. The Criminal Code regulations were amended to make tax evasion a predicate offence to money laundering when determining whether to send a case to the Canada Revenue Agency (CRA). But equally important, pursuant to the coming into force of the regulations to the Bill, the threshold for disclosing information to CRA was lowered from "determining" to "reasonable grounds to suspect" that the information being disclosed is relevant to tax evasion. Read the full text of Notes for remarks by Denis Meunier, Assistant Director, Financial Analysis and Disclosures Directorate, before the House of Commons Finance Committee (Ottawa, March 8, 2011).

Insolvency Practitioners Providing Trustee in Bankruptcy Services

FINTRAC Interpretation Notice No. 7 - Insolvency Practitioners Providing Trustee in Bankruptcy Services (paragraph 5(j) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and subsections 34(1), sections 35 and 36 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations). The purpose of this notice is to clarify the application of the PCMLTFA relating to insolvency practitioners offering bankruptcy services. Insolvency practitioners provide trustee in bankruptcy services. These services are not triggering activities for any obligations under the PCMLTFA. Trustee in bankruptcy services or insolvency practitioners are not covered as services or as an entity under thislegislation. However, if you are an insolvency practitioner and you are an accountant or an accounting firm, you may have obligations relating to other activities.

FINTRAC ANNUAL REPORT 2010 - Ten Years of Connecting the Money to the Crime

During 2010, FINTRAC, as Canada’s financial intelligence unit, celebrated its tenth anniversary. (Refer to the publication FINTRAC ANNUAL REPORT 2010 - Ten Years of Connecting the Money to the Crime.)

FINTRAC made 579 (up from 556 in 2008-09) disclosures of information suspected to be relevant to investigations of money laundering, terrorist financing, and/or threats to the security of Canada. Turnaround time on cases improved 17%, and requests for assistance went up 36%. By using electronic media for case disclosures, it sharply reduced delivery times, and provided a more flexible product for law enforcement and intelligence partners to work with.

FINTRAC published a new series of strategic intelligence assessments focusing on terrorist groups and countries arousing national security concerns, as well as reports informing partners about current and emerging typologies and trends in money laundering and terrorist financing. It was also the Canadian lead for the FATF typology project about the use of new payment methods for money laundering purposes.

The Office of the Privacy Commissioner (OPC) issued a report praising the Centre's management of personal information, and recommended the appointment of a Chief Privacy Officer. FINTRAC was pleased to implement this and other OPC recommendations.

(See Highlights from FINTRAC's 2010 Annual Report.)

Egmont AML/CFT Awareness Video

The Egmont Group of Financial Intelligence Units has released a short animated video to advance awareness and understanding of money laundering and terrorist activity financing. The Egmont AML/CFT Awareness Video is available in English, French and Spanish versions. For more information, read the Egmont News Release online.