The Proceeds of Crime (Money Laundering) and Terrorist Financing Act

I'm a lawyer by training and the director of policy for Canada at the Foundation for Defense of Democracies, which is a Washington, D.C, based think tank devoted to national security and foreign policy. I also work closely with the Canadian Coalition Against Terror, a non-profit organization comprising Canadians terror victims, counterterrorism professionals, lawyers, and others dedicated to combatting terrorism and assisting terror victims in rebuilding their lives. I was honoured to be awarded a Queen Elizabeth II Diamond Jubilee Medal for my advancement of sound public policy on terrorism issues in Canada.

 

I mention these credentials only to give you context for my remarks today, which approach this five-year review of our AML and ATF legislation from a broader strategic and policy perspective. My recommendations in broad outlines are as follows.

 

First, consider creating a subdivision of terrorist financing that would focus specifically on the financing of radicalization activities. Our government continues to emphasize countering radicalization as a foundational component of combatting terrorism. If targeting terror financing is a tool for preventing terrorism, we should also stem the financing of radicalization in order to help prevent it. As long as the foreign patrons of extremist ideologies have an unfettered ability to invest billions of dollars in educational, religious, and cultural institutions in Canada and the west, the threat of extremism and radicalization and, by extension, the threat of terrorism will only grow.

 

Just as FINTRAC is able to disclose information to the CRA when it has reasonable grounds to suspect that information would be relevant to money laundering, tax evasion, and the risk of terrorist abuse of the charitable sector, perhaps FINTRAC should also disclose information to the CRA when it suspects that information would be relevant to radicalization financing within the charitable or non-profit sectors.

 

Second, I noted with interest the testimony of Annette Ryan, who discussed the seized proceeds of crime being used to flow into the central revenue fund of the government, which is then the basis for departmental budgets. May I suggest that some portion, even a small portion, of the the seized funds, especially if they relate to terrorist financing, be directed into a fund that provides support for terror victims.

 

Subsection 83.14(5.1) of the Criminal Code provides that any proceeds that arise from the disposal of terrorist-related property may be used to compensate victims of terrorist activities in accordance with regulations made by the Governor in Council. To my knowledge, the Governor in Council has never created these regulations and the money has never been directed to terror victims. This compounds a larger problem, which is the dearth of government support for terror victims in Canada, particularly those who suffered their loss or damage from a terrorist attack abroad.

 

Third, from a larger policy perspective in the context of our AML and ATF efforts, and perhaps in respect of subsection 11.49(1) of the act specifically, Canada should be extremely cautious about allowing Canadian companies and financial institutions to conduct business in and with Iran, as it continues to entail profound risk, which the Financial Action Task Force has acknowledged.

 

Iran has not addressed the rampant money laundering issues that pervade all sectors of its economy, a problem worsened by systemic financial corruption throughout Iran's government bodies. The IRGC, which controls as much as one-third of Iran's economy, produces hundreds of millions of dollars in counterfeit money through its Quds Force, which is a listed terrorist entity here in Canada. The U.S. treasury secretary has said that IRGC Quds Force's counterfeiting scheme exposes the serious risks faced by anyone doing business with Iran, as the IRGC continues to obscure its involvement in Iran's economy and hide behind the facade of legitimate businesses to perpetrate its nefarious objectives.

 

Fourth, and on a more technical note, it should be a criminal offence for an entity or individual to structure transactions, in other words, to conduct a series of transactions to avoid reporting requirements. In the United States it's a crime to structure transactions. I recently spoke at length with Danny Glaser, who serves on the board of advisers of the Center on Sanctions and Illicit Finance at FDD, where I work. He previously served in the U.S. Department of the Treasury as assistant secretary for terrorist financing in the Office of Terrorism and Financial Intelligence. He told me that they get people in the U.S. a lot on the structuring offences, and he referred me specifically to title 31 of U.S. code section 5324.

 

Read the full testimony here. 

 

Follow the Foundation for Defense of Democracies on Twitter @FDD. FDD is a Washington-based nonpartisan research institute focusing on national security and foreign policy.