The global anti-financial crime watchdog is treating Canada like a student who’s doing enough to get by, but isn’t reaching their full potential.
Driving the news: Canada’s financial crime defences got a passing grade in a long-awaited report from the Financial Action Task Force (FATF) but did not do so with flying colours. The FATF downgraded financial institutions from “largely compliant" to “partially compliant,” and highlighted law enforcement's "persistent” trouble in prosecuting money laundering.
Indeed, it’s estimated that around $113 billion is laundered through Canada every year — a practice dubbed “snow-washing” — and that, between fiscal 2019-20 and 2023-24, a meagre 10% of money laundering charges resulted in a guilty decision.
Why it matters: While the results aren’t stellar, Canada did avoid being put on the “grey list” of countries the FATF deems as having insufficient anti-financial crime controls. This would have been a back-breaking blow during a period of renewed focus on foreign investment.
According to a 2021 International Monetary Fund study, a country that finds itself on the notorious list will see capital inflows drop by 7.6% of GDP on average.
What’s next: Hopefully, this report will be (another) kick in the pants for Canada to step up its financial crime-fighting. It has taken some action this year, most notably pledging $352.7 million over the next five years to get a new Financial Crimes Agency up and running.—QH
