In the first federal election campaign since the Commission of Inquiry into Money Laundering in B.C. concluded, enforcement of crime in Canada’s regulated financial sectors has taken a back seat, say two experts.
“We need governments and institutions to properly regulate so while there will always be cheaters it is at least kept to a minimum. But with people getting away, not going to jail, not paying major fines for non-compliance — in some cases criminal non-compliance — it erodes people’s trust. And it’s also businesses that have to replenish or go bankrupt,” said Denis Meunier, an anti-money laundering consultant based in Ottawa.
Meunier says the issue of white-collar crime has become particularly muted during the short election campaign as a result of soured U.S.-Canada relations and the threat of damaging U.S. tariffs.
But that doesn’t mean the issue won’t play a big role for whoever forms government after April 28, Meunier told BIV.
This year, Canada is due to be graded by the Financial Action Task Force on its financial regulations and the federal government is “long overdue” to review and update the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
“What tends to move the needle in Canada is getting called out internationally,” said Meunier, who has worked on criminal tax evasion enforcement with Canada Revenue Agency and as an assistant director with the Financial Transactions and Reports Analysis Centre of Canada (Fintrac).
Meunier has also recently advised Transparency International Canada, which has advocated for measures such as a beneficial ownership registry for corporations.
That registry has been built for federally registered corporations but there is no pan-Canadian registry, notes Sasha Caldera, a campaign director for Impact, a non-profit human rights lobby group for international natural resource regulations.
Meunier and Caldera say the federal government needs to ensure provinces get on board with registries of their own, otherwise gaps will be left open to money launderers seeking shelter from transparency.
Caldera says the federal registry is “one of the biggest wins” yet for combatting financial crime in Canada.
“There has been a big gap is recognizing the inflow of dirty money entering Canada and there just wasn’t much recognition this election,” said Caldera.
“Looking objectively, the Conservatives do have AML commitments baked into the platform. It’s top level; they talk about sanctions, asset forfeiture, anti-racketeering and strengthening AML laws. All that is missing in the Liberal and NDP platforms,” said Caldera.
However, “both the NDP and Liberal platforms talk about tax fairness; the NDP wants to go after changing laws to fight tax evasion through the tax code,” added Caldera.
He notes tax fairness also arose when the Conservative campaign questioned the corporate structure of Brookfield, the investment management firm formerly chaired by Liberal Leader Mark Carney.
Meunier warns that if financial regulations slip, the small portion of Canadians who are corruptible can grow like a social contagion.
“When the other guy’s getting ahead if he’s cheating, it give others a reason. If you look at Attitudinal behaviour studies conducted by the CRA, surveys show about 13 per cent identify as outlaws. What you don’t want is for that to increase. Why? Well, you can read stories about Greece coming under the IMF because everyone was cheating,” said Meunier.
Another matter for the federal government Meunier would like to see addressed is integrated regulations.
“We need an integrated regulatory compliance team to basically coordinate with real estate regulators, with the law societies, and with any one group that has a financial aspect. You have to really stop the bad guys at the regulatory level before they go criminal,” he said.
In 2022, Commissioner Austin Cullen found billions of dollars washed through B.C. real estate annually.
Cullen made 101 recommendations, largely for the provincial government although many included working with the federal government to shore up enforcement in financial sectors.
But Meunier said a once-promised federal financial crime agency is “nowhere to be seen.”
BIV reported this month that in the past five years law enforcement agencies in B.C. have secured only 12 criminal convictions related to investment and securities fraud.
The reporting caught the attention of Port Coquitlam Mayor Brad West who said on X.com: "When it comes to violent crime, our system is a massive failure. When it comes to white collar & financial crime, our system is non-existent."
