An important reporting tool used by Canada’s anti-money laundering regulator is Offline for three months Experts say this creates intelligence gaps that could hamper criminal or national security investigations.
Network EventsThe March 2 discovery forced the Financial Transactions and Reports Analysis Centre of Canada (also known as Financial Analysis and Reporting Centershut down its online reporting system, which collected data on millions of reports of suspicious or large cash transactions.
While Fintrac said it had found a workaround to collect reports from large companies, anti-money laundering and national security experts said the regulator could still miss thousands of pieces of financial intelligence used to combat money laundering. Money Launderingterrorist financing and organized crime.
Experts say some of the reports could help detect money flowing to conflict zones or identify criminal networks, but have not yet been submitted.
“Canada’s financial intelligence capabilities appear to be breaking down, and our allies are watching,” said Kim Manchester, founder of ManchesterCF, an online financial intelligence training company based in Toronto.
“Our national security is at risk.”
Fintrac is working to combat the billions of dollars in illegal cash laundered through the country, estimated at between $45 billion and $113 billion per year. Canadian Criminal Intelligence Service.
Last year, banks, casinos, real estate firms, mortgage brokers and other businesses that are legally required to file transactions deemed suspicious or large cash transactions over $10,000 sent more than 36 million financial transaction reports to Fintrac.
Fintrac discovered an unauthorized party in its systems, forcing the agency offline, said multiple sources with knowledge of the March cyberattack who spoke on condition of anonymity because they are not allowed to speak publicly.
“Following extensive forensic analysis and due diligence, FINTRAC found no evidence that information was lost or data deleted during the March 2, 2024 cyber incident,” the agency told Global News in a statement.
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The regulator said it worked closely with the Canadian Centre for Cybersecurity and others to contain, investigate and “mitigate the impact of the incident.”
The agency said major whistleblowers, including the big banks, have been able to report suspicious and large cash transactions through an online portal since early April.
Fintrac said that of the 24,000 companies required by law to report, only about 525 submit transactions through the portal. These include large companies, which account for about 96% of annual reports.
However, experts said that small and medium-sized companies such as money service companies, real estate firms and even small banks have not connected to the new portal and have not filed suspicious reports since March.
“Some of the best financial intelligence for law enforcement and national security agencies can come from the quietest places,” Manchester said.
Canadian law requires Canadian banks, real estate firms, mortgage brokers, casinos and thousands of other businesses to report all large financial transactions or any funds they suspect may be linked to terrorism or money laundering.
Fintrac distributes the reports to police agencies across the country, which use them to conduct criminal investigations into human trafficking, fentanyl dealers and auto theft networks. Last year, the agency said it sent more than 2,000 reports to law enforcement and national security agencies.
“Law enforcement uses (these reports) to track the money, follow the money flow, and find criminals,” said Matt McGuire, an internationally renowned anti-money laundering expert.
“This is an extremely serious problem.”
The agency also sends hundreds of reports each year to its Five Eyes partners, an alliance consisting of Australia, Canada, New Zealand, the United Kingdom and the United States.
Aaron Shull, managing director of the Center for International Governance and Innovation, a nonpartisan think tank, said any delay in getting information to our international partners could create “blind spots.”
“What we're trying to do here is stop terrorist networks from getting financed and stop criminal organizations from laundering money,” Schur said.
“This is not just about accountants crunching numbers. This is about keeping Canadians safe.”
According to the 2023 report Department of Finance CanadaCanada considers certain business sectors, such as money services businesses or precious metals dealers, to present a higher risk of money laundering or terrorist financing.
McGuire said the companies had failed to submit “tens of thousands” of reports over several months.
“It’s a huge intelligence gap,” he said. “It’s going to take a long time for us to catch up.”
Responding to criticism that the intelligence was not being sent to police, the regulator said it was still “actively disclosing financial intelligence to support money laundering and terrorist financing investigations by Canadian law enforcement and national security agencies.”
The agency did not directly respond to questions about how many reports might have been missed.
When asked when the main reporting system might be back online, Fintrac did not give a firm deadline, saying only that the agency would make the “cyber reporting system” a “priority” “between April and June 2024.”
Experts say delays in fully restoring Fintrac’s capabilities are hurting our ability to assist domestic criminal investigations and making our country “less safe.”
“Money laundering may seem like a very academic issue, but it really impacts Canadians’ everyday lives,” McGuire said. “It’s the oil that keeps the criminal machine running.”
