Supporters of a proposed new Financial Crimes Agency (FCA) say the country urgently needs the new enforcement body to combat money laundering and fraud, and help Canada shed a reputation as a haven for illicit funds and sophisticated financial crime.
Critics, however, argue the $353 million agency could add another layer of bureaucracy to an already fragmented system, while doing little to improve investigations or prosecutions tied to financial crime.
“Done poorly, the FCA risks becoming another bureaucratic layer that produces reports rather than arrests,” said Ken Chan, a former Canadian border police officer and senior policing adviser to the Mayor of London’s Office in the United Kingdom.
“Done properly, it can fill the gap between solid intelligence and impactful enforcement,” he wrote in the public policy publication Policy Options on April 2.
Bill C-29, introduced in Parliament on April 27, would create Canada’s first federal law enforcement body dedicated exclusively to investigating money laundering, proceeds-of-crime offences, and digital asset fraud.
International Watchdog
The debate comes ahead of a major review of Canada’s anti-money laundering regime by the Paris-based Financial Action Task Force, the international watchdog that sets global standards for combatting money laundering and terrorist financing. Results are expected later this summer. In its last evaluation of Canada in 2016, the task force found serious weaknesses in enforcement and prosecutions.The problems have not been resolved, and Canada has come under regular criticism for generating large amounts of financial intelligence but few major prosecutions.
The agency would be staffed by a mix of sworn officers, civilian investigators, financial intelligence analysts, asset recovery specialists, and dedicated prosecutors.
Enforcement Record
The new agency would emerge from a system long criticized as fragmented and ineffective.FINTRAC serves as Canada’s anti-money laundering regulator and financial intelligence unit, collecting reports from banks, credit unions, and money services businesses, but it lacks the authority to conduct criminal investigations, seize assets, obtain warrants, or make arrests.
Those responsibilities have largely fallen to the RCMP’s Integrated Market Enforcement Teams (IMET), established in 2003 to investigate major financial crimes.
A 2018 RCMP internal review found there had been “few cases investigated that fit the IMET mandate” and cited a “lack of results commensurate with the level of funding being allocated.” The review also acknowledged that “transformation is necessary,” citing “repeated calls for improvement by experts, the media” and others.
The Cullen Commission into money laundering in British Columbia in 2022 described the RCMP’s response to complex financial crimes as inadequate. The commission also said FINTRAC struggles to provide police with timely, useable intelligence, despite the large volume of suspicious transaction reports it receives.
‘Snow Washing’
Transparency International has highlighted that the term “snow washing” has been coined to describe Canada as “a good destination for funds due to easy corporate secrecy, low oversight.”“Over the last two decades Canada has been criticized at home and internationally for its weak enforcement record in response to money laundering, foreign bribery, sanctions enforcement, and other criminal offences that could fall under the broad category of ‘financial crime’,” the anti-corruption organization said in a 2023 report.
Transparency International Canada’s executive director, Salvator Cusimano, called the proposed mandate “ambitious but realistic” and described the bill as “a much-needed first step in improving our enforcement of financial crimes.”
Cusimano cautioned, however, that the agency’s success would depend heavily on coordination with police, regulators, and prosecutors across the country. Others have similarly warned that poor implementation could leave the FCA functioning as little more than a “paper tiger.”
