Based on coverage from The Globe and Mail, Finimize, and The Express Tribune.
Global financial crime auditors have wrapped up a three-week examination of Canada's financial crime defences, interviewing executives from major banks and 13 government agencies. This comprehensive review, conducted by the Financial Action Task Force (FATF) and representatives from seven other countries, comes at a critical time for Canada as it seeks to bolster its international reputation and attract foreign investment.
TD Bank's Historic Fine Raises Concerns
The spotlight is particularly intense on TD Bank, which last year paid a record US$3 billion fine to settle a U.S. money laundering case. This has heightened concerns in Ottawa and Toronto's financial sector, as the FATF's findings could impact Canada's foreign investment prospects. The timing of the review coincides with new legal troubles for Ryan Wedding, a former Canadian Olympic snowboarder turned alleged cocaine trafficker, adding to the scrutiny.
Canada's Anti-Money Laundering Efforts Under Review
Since the last FATF review in 2016, Canada has made strides in improving its anti-money laundering measures, such as establishing a federal registry to track company ownership and enhancing data-sharing across agencies. However, the FATF's current focus is on how well individual banks, like TD, comply with these regulations, rather than the overall coordination between agencies. The outcome of this review could have significant implications for Canada's economic strategy, as Prime Minister Mark Carney aims to diversify trade relations and reduce reliance on the United States.
Potential Impact on Canada's Global Standing
A negative report from the FATF could deter foreign investors, wary of transparency risks, and damage Canada's reputation as a secure and reliable financial hub. With financial crime estimated to cost Canada up to C$113 billion annually, or about 5% of GDP, the stakes are high. While experts don't expect Canada to be placed on the FATF's 'grey list', even minor criticisms could prompt lawmakers to accelerate reforms.
Proposed Reforms and Future Steps
Mark Carney has proposed the creation of a federal agency dedicated to investigating financial crimes, with a budget of C$1.8 billion to combat these issues. Although this agency was first suggested in the 2022 budget and reiterated in Carney's budget this year, it has yet to be established. The Canadian Banking Association, representing the country's largest banks, has supported changes to the anti-money laundering strategy, including improved information sharing.
Looking Ahead: Canada's Path to Improvement
As Canada awaits the FATF's final report, due in June 2026, the focus remains on strengthening its financial crime defences. A clean evaluation would reassure international partners and investors of the country's commitment to maintaining a secure financial system. However, as Jeffrey Simser, former legal director with the Ontario Ministry of the Attorney General, points out, the real test will be in effectively using the laws already in place.
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Coverage was consistent across all sources, focusing on the Financial Action Task Force's review of Canada's anti-money laundering efforts and the potential implications for the country's financial reputation and foreign investments. No meaningful differences in coverage were found across the sources provided.
