Canada still a “major money laundering country” in 2013 International Narcotics Control Strategy Report on AML

By Christine Duhaime | March 27th, 2013

The 2013 International Narcotics Control Strategy Report (“INCSR“) published this month by the U.S. Department of State, particularly volume I on the drug trafficking trade, is more favourable of Canada than the last two years, primarily as a result of the enactment in Canada of the Omnibus Crime Bill C-10, know as the Safe Streets and Communities Act.

However, Canada is still a “major money laundering country” along with, among others, Afghanistan, Brazil, Cambodia, Dominican Republic, Guernsey, Jersey, Libya, Mexico and Macau. A “major money laundering country” is one whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking.

The key findings of Volume 1 on the drug trade vis a vis Canada are:

  • Canada remains a major producer of precursor chemicals used in the production of illicit narcotics;
  • Canada also remains a destination and transit country for precursor chemicals, especially crystal meth and ecstasy;
  • Precursors in Canada are smuggled in from China and India and although some illegal imports are detected, the levels of seizures has decreased significantly, possibly a reflection of less resources allocated to CBSA;
  • Canada remains a substantial producer of ecstasy for domestic use (from British Columbia) and remains the primary supplier to the U.S.;
  • Canada also supplies ecstasy in large quantities to Japan, Australia and New Zealand;
  • Cannabis is produced in significant quantities in Canada (British Columbia primarily) for domestic use and for export to the U.S.; and
  • Canadians are among the heaviest consumers of opiates in the world and have a preference for diazepam, clonazepam, lorazepam, methylphenidate, pentazocine, oxycodone, and steroids.

The key findings in respect of money laundering and financial crime in Volume 2 for Canada are:

  • Canada is a country of primary concern for money laundering, along with places such as Afghanistan and Argentina;
  • Canada remains a major money laundering country because its banks continue to allow transactions from drug proceeds;
  • Money laundering activities in Canada primarily are from illegal drug trafficking and financial crimes (securities fraud and credit card fraud);
  • Trade-based money laundering is a concern in Canada;
  • There were only 18 convictions for money laundering in Canada – one of the lowest worldwide rates;
  • Canada continues to have a very weak enforcement capability for money laundering;
  • Canada continues to have a weak conviction capability for money laundering;
  • Prosecutors in Canada plea bargain away money laundering cases because they are perceived as “too difficult”; and
  • Casino industry issues continue to be a problem and Canada should work to strengthen its AML/CTF measures for casinos.

Volume 1 Available here.

Volume 2 Available here.

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