The Anti-terrorism Act

CANADA'S ANTI-MONEY-LAUNDERING AND ANTI-TERRORIST FINANCING INITIATIVE 

Introduction

The Anti-terrorism Act (ATA) amended, among other pieces of legislation, the Proceeds of Crime (Money Laundering) Act (PCMLA) to expand the mandate of the Financial Transactions and Reports Analysis Centre (FINTRAC), Canada's financial intelligence unit, to include the detection and deterrence of terrorist financing.

An important strategy of the Government's counter terrorism plan is to deprive terrorists of the funds needed to finance their activities. Accordingly, the ATA also amended the Criminal Code to establish new criminal offences related to the financing of terrorism. As well, it implemented other measures to deter, detect, investigate and prosecute these terrorist activity financing offences.

The ATA made changes to Canada's existing anti-money laundering regime to both guard against the abuse of the financial system by terrorist groups and to provide law enforcement authorities and the Canadian Security Intelligence Service (CSIS) with information about suspected terrorist financing activities and other threats to the security of Canada.

The core elements of Canada's anti-money laundering regime were originally set out in the PCMLA. Among other things, the PCMLA required financial intermediaries to meet customer identification and record keeping standards and to report suspicious and prescribed transactions relevant to the identification of money laundering.

The PCMLA also provided for the establishment of FINTRAC in July 2000. FINTRAC became operational on October 28, 2001 and its primary functions were to receive reports made under the PCMLA, to analyze those reports for information relevant to money laundering, and to provide key identifying information (e.g. account holder, transaction amount and date, etc.) to Canadian law enforcement agencies.

In December 2001, following the passage of the ATA, FINTRAC's mandate was expanded to include terrorist activity financing and the PCMLA was renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Associated regulations were brought into force on June 12, 2002 to require financial institutions and other financial intermediaries to report suspicions of terrorist activity financing and terrorist property.¹ FINTRAC has been fully operational since March 2003 when the remaining financial transaction reporting obligations came into force.

The Senate Committee on Banking, Trade and Commerce completed a review of the PCMLTFA in October 2006. Bill C-25, amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, received Royal Assent on December 15, 2006, ensuring Canada continues to be a global leader in combating organized crime and terrorist financing.

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FINTRAC'S Operations

FINTRAC is an independent federal agency and operates at arm's length from law enforcement and Canadian government departments and agencies to which it provides financial intelligence (RCMP, CSIS, the Canada Border Services Agency (CBSA), and the Canada Revenue Agency (CRA)). This arm's length relationship between FINTRAC and law enforcement and intelligence agencies is by design and serves to protect the privacy of Canadians. FINTRAC reports to Parliament through the Minister of Finance, and is headed by a Director who has all of the rights and obligations of a deputy head of a Canadian federal government department.

FINTRAC has been making an important contribution to the domestic and international fight against terrorism. It receives information from a wide range of financial institutions and intermediaries, which includes:

• Banks
• Credit unions
• Trust and loan companies
• Securities dealers
• Life insurance companies
• Brokers or agents
• Real estate brokers or sales representatives
• Accountants and/or accounting firms
• Money services businesses
• Foreign exchange dealers
• Casinos, and Agents of the Crown that accept deposit liabilities or sell money orders

It is estimated that more than 300,000 persons and entities are potentially subject to the reporting requirements in Canada.

^[1]These amendments allowed Canada to broadly comply with the Financial Action Task Force on Money Laundering (FATF) Special Recommendations on Terrorist Financing adopted in October 2001. The FATF is an international body aimed at developing and promoting international standards to combat money laundering and terrorist financing.

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Updated to April 1, 2008.