Canada has no idea how much dirty money local gangsters, violent drug cartels and sophisticated transnational gambling networks are washing within its borders every year, according to a confidential draft research paper from the country’s money-laundering watchdog.
The report, titled Estimating Scale of Money Laundering in Canada, prepared by the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), set out to identify the best way of defining the contours of the problem. Ultimately, the report could not settle on a single solution, with estimates ranging from $5-billion to $40-billion.
That’s very troubling, according to experts, because as long as the federal government is without running estimates for how much is being laundered, it won’t know how effective authorities are at stopping this sophisticated crime.
The draft research brief was created some time between January, 2015, and May, 2016, and released through freedom-of-information laws to Ottawa-based researcher Ken Rubin, who recently shared it with The Globe and Mail.
The report details five different ways of estimating the problem and includes a chart at the end listing the pros and cons of each approach as well as the “data points needed should Canada go with this method.” Several sections were blacked out and the paper was stamped with a “Protected A” security level, which means if it was made public it "could cause injury to an individual, organization or government,” according to Ottawa’s regime for safeguarding sensitive information.
“Analysis has been done on this issue (estimating the amount of laundered money within a given jurisdiction) for approximately 20 years; however, there appears to be no consensus on which methodology, if any, can be relied on for this purpose,” the 19-page report states in its findings section.
“Given the limitations of these methods, it is more realistic to think of them as offering a number of ‘reference points’ as opposed to providing a conclusive value for the scale of money laundering in Canada or abroad."
Denis Meunier, an anti-money-laundering consultant and deputy director of financial intelligence at FinTRAC from 2008 to 2011, said crafting official estimates and making them public are very important steps.
“We need to measure or estimate the change over time, in constant dollars, to gauge if we are making a dent in the problem or not and whether the measures we are taking to combat [money laundering] are working or not,” said Mr. Meunier, who also serves as a senior adviser to Transparency International Canada. "It is not an easy task, but we need to come up with a means of properly assessing the problem.
“In the meantime, organized crime will take advantage of our ignorance and continue to exploit our weakness."
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FinTRAC spokeswoman Renée Bercier said this week that the “reference material” was never published “because all of the information in it was taken from publicly available information.” Asked for the agency’s current estimate of how much is being laundered, she referred The Globe to the Department of Finance’s 2015 national risk assessment that stated criminal activity across the country “generates billions of dollars in proceeds of crime annually that might be laundered.”
She added: “It’s important to remember that money laundering is a clandestine activity, for which it is difficult – if not impossible – to provide a reliable estimate.”
Every known examination of the problem has produced numbers that have shocked the public.
Over the past year, the extent of money laundering in B.C.'s casinos and real estate sectors has come into focus and caused public outrage as details emerged about specific cases. In February, 2018, a Globe investigation uncovered how 17 underground lenders had claimed a $47-million stake in three dozen Vancouver-area properties, allowing people connected to the transnational fentanyl trade to park their illicit gains in the real estate market.
Last year, B.C. Attorney-General David Eby appointed former deputy commissioner of the RCMP Peter German to examine the role of money laundering in B.C.'s casinos. Mr. German’s Dirty Money report, published last summer, concluded that, using a “very conservative estimate,” $100-million a year was being washed through these establishments. Mr. German’s next report, due by the end of this month, examines whether B.C.'s real estate market is being used to launder millions.
A July, 2018, case study by the Group of Seven-led Financial Action Task Force alleged an unregistered currency exchange in Richmond, B.C., was part of an underground banking network laundering more than a billion dollars a year in illicit drug and gambling money.
Bill Blair, the federal Minister of Border Security and Organized Crime Reduction, told reporters at a news conference in Vancouver earlier this year that Ottawa will ensure information is shared more effectively among law enforcement agencies across the country so they can better investigate this large issue.
“Organized crime does not share their spreadsheets with us, they do not give us precise details," the former chief of the Toronto Police Service said.
Mike Hager