The discovery of $2 million sent to Canadians from a suspected money-laundering network designed to hide dirty Russian money highlights the weaknesses of a financial intelligence system with too many loopholes and not enough teeth, say experts.
International banking documents provided to CBC News reveal 30 Canadian companies and individuals received dozens of payments between 2008 and 2013 from accounts in Cyprus and Lithuania.
The accounts are suspected to belong to an international web of companies created to obscure the movement of hundreds of millions of dollars connected to elaborate Russian tax frauds.
The revelation is no surprise to Denis Meunier, former deputy director of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Ottawa’s financial intelligence watchdog, who says Canada is the ideal place to wash illicit funds.
“If you have dirty money to launder, you want it to go to a stable environment. You want it to be safe.”
He says Canada needs to show more leadership in combatting a problem that plagues the economy by allowing proceeds of crime to infiltrate the country’s balance sheets and real estate.
“The average person has very little knowledge of the impact of money laundering, but if you work in it every day, you’re blown away.”
A 2016 report by the Financial Action Task Force (FATF), an international group that evaluates countries’ financial intelligence efforts, highlighted several weaknesses in Canada’s system, including not enough reporting of suspicious activity by real estate and legal professionals and too little transparency in who really owns corporations.
The report’s authors also pointed out that Canadian authorities often don’t investigate money-laundering cases with “complex corporate elements or foreign ownership.”
Complex and foreign are exactly the picture painted by Bill Browder, the U.K.-based investor who has spent the past nine years tracing the Russian funds and who provided the documents with what he discoverred to CBC News.
Moving money between countries creates a significant challenge for law enforcement working with different anti-money laundering regimes to detect, investigate and ultimately prosecute the crimes.
“What the money launderers do is they try to create so many different nodes in so many different jurisdictions that it’s almost an impossible task for anybody other than the most determined people to put together the pieces,” says Browder.
20 million reports every year
Canadian recipients of the $2…