Report Raps Canada Over Lax Anti- Money Laundering Rules

by Robert Lee, Tax-News.com, London

11 October 2001

In the wake of the recent crackdown on the laundering of terrorist assets, Canada has come under fire from the United States over its lax attitude towards money laundering, according to reports in the Canadian media.

A study undertaken by the Canadian Life and Health Insurance Association in 1999 came to the conclusion that: 'Canada is considered an attractive jurisdiction for money laundering for numerous reasons including its stable currency and relatively strong economy, its long, undefended border and [the] huge volume of commercial and financial trade with the United States.'

In an article on Tuesday somewhat scathingly entitled 'When Monkeys Guard Bananas', the Canadian Financial Post argued that not a lot has changed. The newspaper condemned previously enacted anti-money laundering laws which placed the responsibility for checking and reporting on the shoulders of the financial institutions themselves, as 'toothless', and argued that this encouraged internal corruption within the country's powerful banking lobby, leading to a greater incidence of money laundering activity.

However, Canada has been nothing if not cooperative in the international hunt for terrorist assets, and within a week of Washington issuing its 'hit list' of organisations possibly involved with terrorist activities, Canadian based Scotiabank announced that it had frozen several accounts.

Although the progress of the latest anti-money laundering legislation, designed to bring Canada into line with other G7 countries, and with provisions for the establishment of a responsible central authority and regulatory body, stalled on September 4th, in the current international climate it seems likely that a resolution will be reached soon.

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