According to the International Monetary Fund, money laundering schemes account for between two and five percent of the world’s gross domestic product. Money laundering operations, dummy corporations, terrorist financing enterprises, and drug trafficking operations comprise the bulk of challenges confronting the international banking and financing sectors, all of which require a robust consortium of international players and governments to tackle and eliminate such enterprises.
The Egmont group, comprised of multiple financial intelligence units (FIUs), was designed to promote and enhance international cooperation and capacity building in anti-money laundering and anti-terrorist financing. Established in 1995, Egmont has a membership of more than 100 FIUs, including Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC). On July 7, Canada’s Minister of Finance Jim Flaherty pledged $5 million over the next five years to make Toronto the permanent headquarters of the Egmont group.
Additionally, the Canadian government is scheduled to assume the position of president of the Financial Action Task Force (FATF) later in July and will act in this capacity for a year. The FATF is an international body that develops and promotes policies to combat money laundering and terrorist financing. The Canadian government also recently announced its official membership in the Asia/Pacific Group on Money Laundering, an independent regional body that is similar manner to the FATF.
Canada’s involvement in the aforementioned organizations symbolizes the country’s renewed commitment to combating international money laundering and terrorist financiers operating within its borders. Due to Canada’s liberal immigration policies, immigrant enclaves comprised of displaced persons and/or refugees have flocked to Canada. However, with these diverse communities, elements representing terrorist organizations, rebel groups, and “freedom fighters” often migrate and act as the monetary fundraisers of these groups in Canada and elsewhere.
Recognizing the proliferation of these groups, Canada’s FINTRAC was mandated in 2001 to combat terrorist financing operations. Since then, FINTRAC has detected, investigated, and prosecuted individuals. In 2005, FINTRAC reported that an estimated $180 million in suspected terrorist financing had occurred by expatriate groups in Canada, a $70 million increase from 2004. Acknowledging this challenge, the Canadian government has committed $64.4 million in fiscal year 2006 to enhance Canada’s capacity to detect and fight money laundering and terrorist financing.
Since 9/11 , the international community has attempted to curtail the financing of transnational terrorist organizations through a variety of means. However, without a coherent and synchronized approach by national governments, eliminating nefarious financing activities will prove futile. Canada’s successes should be emulated by other national governments.
