Canada is set to establish a new and powerful law enforcement agency to investigate financial crime, marking a stark contrast with the United States, where federal investigators have been weakened and the White House has pardoned convicted money launderers. The bill to create the Financial Crimes Agency (FCA) completed its first reading in parliament this week, introduced by the governing Liberals. With their parliamentary majority, the party is expected to move it through both levels of government swiftly.
New Agency to Investigate and Prosecute Financial Crimes
The FCA is tasked with investigating and prosecuting financial crimes, a direct outcome of a public inquiry that found Canada lacked a cohesive strategy against money laundering, placing it behind international peers. Jessica Davis, a former intelligence analyst with Canada's spy agency who focuses on terrorism and illicit financing, commented: "The fact we're actually seeing the creation of a new enforcement agency is a meaningful investment and hopefully signals the understanding of the seriousness of the challenge."
Ban on Cryptocurrency ATMs
In addition to the new agency, Canada will ban cryptocurrency ATMs, which officials say have been used by scammers to defraud victims and by criminals to launder proceeds of crime. Canada has nearly 4,000 cryptocurrency ATMs, the highest per capita in the world. This move aims to curb illicit financial activities facilitated by these machines.
Current Financial Intelligence Unit
For over 25 years, the Financial Transactions and Reports Analysis Centre (Fintrac) has served as Canada's financial intelligence unit. Last year, Fintrac uncovered $45 billion in transactions related to money laundering, counterterrorist financing, sanctions, and evasion disclosures. However, Davis noted: "It's a figure that could be too high or far too low – we just don't fully know the scope of financial crime in this country." Fintrac does not track or arrest criminals; it hands off investigations to police and prosecutors. Under the new legislation, the FCA will take on investigation and prosecution duties, reducing the scope and mandate of Fintrac and the Royal Canadian Mounted Police (RCMP).
Challenges with Current Enforcement
Davis highlighted the RCMP's shortcomings: "The challenge is that RCMP has been unable and unwilling to actually investigate and sustain investigations related to financial crimes. There is a lack of funding, a lack of skills, lack of resources, and a lack of political will. But financial crimes investigations are long, complex, and require sustained resources, which I'm hopeful we're now going to see put in place."
Global Scale of Financial Crime
A 2024 report estimated that over US$3 trillion in illicit funds moved through the global financial system in the previous year, with major culprits including money laundering for human and drug trafficking, as well as terrorist financing. A US Treasury Department report found these efforts had "devastating economic and social impact" on citizens.
Contrast with US Approach
The Canadian initiative contrasts sharply with the current US administration's approach. Donald Trump's government issued a high-profile pardon to Changpeng Zhao, the self-styled "king" of cryptocurrency, after he pleaded guilty to money laundering charges. His company, Binance, was ordered to pay a record $4.3 billion penalty for facilitating terrorist financing. In January, senior Democrats called for an investigation into Trump's decision to shift over 25,000 personnel from investigating fraud, tax evasion, and money laundering to immigration enforcement. Senator Elizabeth Warren stated: "The Trump administration is letting white-collar criminals off the hook for all kinds of wrongdoing. Instead of protecting American families from fraud and predatory behaviour, the administration is diverting resources to pursue its inhumane immigration agenda."
Diverging Paths
Davis observed: "Canada and the US are diverging. The US is still far ahead of us in terms of its ability to prosecute and investigate financial crimes. We're still playing quite a bit of catch-up now. Hopefully, Canada will shore up our own abilities to protect Canada. Because the things that happen in the US do tend to happen in Canada. This new agency is a bulwark against that."
Reaction from Anti-Corruption Groups
The creation of the FCA was applauded by anti-corruption groups. Salvator Cusimano, executive director of Transparency International Canada, said: "The government is proposing an ambitious but realistic mandate for this agency, which bodes well as a much-needed first step in improving our enforcement of financial crimes. Once established, the agency must coordinate closely with other enforcement and regulatory agencies across the country to achieve its potential."
Uncertainties Ahead
It remains unclear how easily the agency will work alongside the RCMP, where it will be based, and whether it will draw key resources from other units. Davis emphasized: "This agency matters to Canadians because when you combine economic pressures, the cost of living, and difficult existence for everyday people, we have less tolerance for people making money off us. This is a massive and necessary investment for Canada. But we'll also have to keep pressuring the government to continue to fund and prioritize it to achieve the outcomes we're looking for."
