Canada

CHAPTER 3. LEGAL SYSTEM AND OPERATIONAL ISSUES
129. While the CBSA may investigate fiscal crimes, it does not have the powers to investigate
related ML/PPOC cases, and in instances where it considers that there are reasonable grounds to
suspect that a person is or has been engaging in ML activities, it reports the case to the RCMP. The
latter recorded that between 2010 and 2014 there were 444 ML/PPOC occurrences related to cross
border currency reporting. The authorities provided one case (“Project Chun,” described in the Box
below) of a successful ML investigation started in 2002 on the basis of a CBSA referral. Whilst the
assessment team was also shown several ML cases involving parallel investigations arising from
CBSA’s enquiries into smuggling or customs related offenses, no other cases arising from CBSA’s
cross-border declaration/seizure reports were provided. It therefore appears that, in practice,
information collected at the border is analysed or investigated with a view to pursuing ML activities
to a very limited extent only. The cross-border declaration system is not adequately used to identify
potential ML activities.
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Box 4. Case study: Project Chun
In October 2002, a male was intercepted at the Montreal International Airport with USD 600,000
cash in his hand luggage. In the absence of a valid explanation, the money was seized and the case
was referred to RCMP which initiated an investigation to determine the source and destination of
the money. Extensive enquiries unveiled that the male and his wife owned two currency exchange
companies in Canada and in 2000 they made an agreement with a drug trafficker to assist the latter
in laundering proceeds deriving from drug trafficking activities. The laundering included use of
various financial services and an elaborate scheme for the transfer of money to a bank in Cambodia
that was owned and controlled by the couple. The precise amounts involved in these activities are
estimated at more than CAD 100 million. Information received from FINTRAC indicated that the
couple dealt in large sums of cash and that their bank account activities did not fit their economic
profiles. Travel records of one of the accomplice money launderers were received from Cuba
through MLAT requests. The accomplice, who was detained in custody in the US, was later
transferred from the US to Canada to provide testimony for the prosecution. Canadian investigators
had travelled to Israel and Cambodia for tracing after and restraining the crime proceeds. The
couple applied delaying tactics during the prosecution and the Canadian authorities eventually
convicted the couple with six counts of Money Laundering and seven counts of tax offenses. In
March 2015, the couple was each sentenced to eight years of imprisonment and ordered to pay fines
of CAD 9 million. Two real properties, USD 600 000 and the shares of a bank in Cambodia were
forfeited.
130. Canada’s main law enforcement policy objective is to prevent, detect and disrupt crimes,
including ML, but in practice, most of the attention is focused on securing evidence in relation to the
predicate offense and little attention is given to ML, as evidenced by the discussions held as well as
by the case studies provided. LEAs focus on criminal actions undertaken by OCGs (i.e. mainly drugrelated
offenses and fraud). Cases studies and figures provided by LEAs demonstrated that they also
investigate other high-risk offenses (e.g. corruption and tobacco smuggling), but to a limited extent
only. Insufficient efforts are deployed in pursuing the ML element of predicate offenses and pursuing
Anti-money laundering and counter-terrorist financing measures in Canada - 2016 © FATF and APG 2016
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