Financial-crime watchdog eyes politicians
The federal watchdog agency that’s supposed to track suspicious financial transactions seems to be getting bypassed by an assortment of gangsters and moneylaunderers running rampant in Vancouver.
But that doesn’t stop Fintrac from keeping a vigilant eye on a group that wouldn’t normally be considered the top suspects for that kind of activity — Canada’s politicians.
The Financial Transactions and Report Analysis Centre has issued lengthy guidance and interpretation bulletins in the past year on what it calls PEPs — politically exposed persons.
They are broadly defined as people entrusted with a prominent position that typically comes with the opportunity to influence decisions and the ability to control resources. That puts them in a position “to impact policy decisions, institutions and rules or procedure in the allocation of resources and finances, which can make them vulnerable to corruption.”
The detailed definition includes almost every politician in Canada, deputy ministers and Crown corporation heads, among others.
A Fintrac paper written for financing institutions stated: “It is important to understand that the possibility for corruption exists, and that politically exposed persons … can be vulnerable to carrying out, or being used for, money-laundering or terrorist-activity financing offences.
“Part of knowing your clients is determining whether a person is a foreign PEP, a domestic PEP … or a family member or close associate of one of these people.”
Money managers are obliged to report international fund transfers over $100,000 and were warned they have an obligation to determine whether any parties involved in such transactions are politically exposed people.
The document advises the finance industry that if it finds a politically exposed person is involved in such a transfer, they have to determine if the person is a high risk for money-laundering or funding terrorism. They also have to take reasonable measures to determine the source of the money being transferred.
The politically exposed person definition extends to their family members and close associates.
The document also includes a detailed procedural manual on how to categorize a politically exposed person moving money internationally as high risk — “attempts to shield identity, makes use of intermediaries, seems uncomfortable providing information, reluctant to explain the reason for receiving or sending funds.”
The documents amount to explicit and detailed guidance that urges the financial industry to monitor and investigate any large international fund transfers involving any politicians or influential people in Canada.
And they raise the question of how such theoretically intense scrutiny can be so easily avoided in B.C., where reporters have detailed huge money-laundering operations so entrenched they’re known as the “Vancouver model.”
Stories for the past year based on official documents have reported how organized crime has used high-rolling Chinese gamblers to launder fantastic amounts of drug cash through River Rock Casino in Richmond, where the dirty money is traded for chips.
Authorities reported $13.5 million in $20 bills was processed through that casino in one month.
Postmedia located one document that showed how the B.C. Lottery Corp. prepared internally for media questions about how it reports cash transactions to Fintrac. One of the practice questions was: “How do you respond to criticism that Fintrac is a warehouse that houses valuable information about potentially illegal activity that no one ever uses?”
There have also been reports of an audit of B.C. realestate agents that found weak compliance with the legal obligation to report international fund transfers associated with real estate deals to Fintrac.
Liberal MLA Ralph Sultan brought the concept of PEPs to light in the legislature this week. He said the obligation to be aware of suspicions was imposed on all politicians. “It was a rather open-ended blanket obligation they imposed on all politically exposed persons in Canada.”
Solicitor General Mike Farnworth responded by referring to the disclosure requirements in B.C.’s conflict-ofinterest law. But Sultan said later the minister didn’t seem to be aware of Fintrac’s new interest in politicians.
Just So You Know: Fintrac cast such a wide net around the family and close associates of politically exposed persons that it startled the 84-year-old Sultan. PEPs include spouses, parents and children, he said. “Astonishingly, for a federal advisory, it also said that I would also have to count my mistress. I beg to say I haven’t got one — at the moment, at least.”