Canada’s anti-money laundering agency struggles to implement reforms as employees work from home

The federal agency chargeable for monitoring and stopping cash laundering and terrorist financing has struggled adapting to distant work, which has affected its compliance operations and delayed the implementation of amendments to anti-money laundering laws.

Internal paperwork from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) obtained by means of freedom of data laws paint an image of considerable disruption on the agency, particularly within the first few months of the pandemic, when a whole bunch of employees have been abruptly compelled to work from home.

One slide of an inside presentation states that employees had “no entry” to the instruments wanted to implement updates to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act by the June 1, 2021, deadline.

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Numerous legislative modifications have been made to the act in mid-2019 to carry Canada’s anti-money laundering regime – which has lengthy been criticized for holding deficiencies and being opaque – according to worldwide requirements. Key amongst them was guaranteeing that every one cryptocurrency exchanges that facilitate transactions for Canadians register as money-service companies. Crypto corporations can even have to submit experiences to FINTRAC detailing transactions value greater than $10,000. Most of the modifications have been set to come into pressure in phases on June 1 final yr and June 1 of this yr.

But the pandemic “profoundly disrupted implementation targets,” in accordance to the interior presentation made by members of FINTRAC’s strategic coverage and evaluations crew final June. The presentation, apparently meant for senior officers, reviewed the influence of the pandemic on the division’s operations and proposed varied choices for delaying the applying of the brand new guidelines. The conclusions of any discussions have been shared with the Department of Finance on June 4, 2020.

The presentation and different paperwork have been obtained by researcher Ken Rubin and shared with The Globe and Mail, however a lot of the content material was redacted.

“Consistent with public-health directives, FINTRAC personnel haven’t had entry to key instruments for growing and testing techniques because the Centre started distant work on March 16, 2020,” the presentation said.

The agency was ready to create momentary workarounds to meet sure legislative targets, however that created a “backlog” and prompted “cascading delays to all features of implementation” to the anti-money laundering act.

For instance, FINTRAC was supposed to modify varieties utilized by cryptocurrency exchanges to report massive transactions by June 1, 2020. The paperwork state that this work had been below means however couldn’t be accomplished in time as a result of it required instruments accessible solely from the agency’s premises.

It is unclear what these particular instruments are or why FINTRAC didn’t enable employees to enter its workplaces on the time to entry them. But as a outcome, the modification to the varieties, and thus the reporting of huge transactions by crypto exchanges, has been delayed by a yr.

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In response to The Globe’s questions in regards to the influence of such delays, FINTRAC spokesperson Erica Constant stated the agency “rapidly and successfully mobilized its operations” when the pandemic started.

“Since March, 2020, FINTRAC has vastly elevated its distant and on-site system entry capability, together with in relation to its growth and testing instruments, so as to proceed implementing precedence initiatives and ship on its important mandate,” she stated.

Ms. Constant stated employees can now entry the instruments they want to do their jobs successfully, however she didn’t say how lengthy the distant work challenges persevered or how and once they have been resolved.

Ultimately, it seems the pandemic compelled the agency to stagger the implementation of modifications to the anti-money laundering act, which can now be achieved in phases till April, 2024. “The staggered-implementation method accounts for modifications needing to be made to IT techniques by each FINTRAC and reporting entities,” Ms. Constant stated.

The inside paperwork point out that corporations below FINTRAC’s watch have additionally struggled with the “monetary and operational burden of compliance” due to COVID-19. Not staggering the implementation of amendments to the act, the paperwork stated, meant FINTRAC may very well be perceived as “rigid” by the media, which might “injury the relationships between FINTRAC and [reporting entities].”

The agency additionally pressed pause on on-site examinations final March and has not but resumed them. Pre-pandemic, FINTRAC compliance officers would conduct assessments or enforcement operations on the workplaces of corporations below their watch. These have principally been transformed to “desk examinations,” whereby reporting entities go to FINTRAC’s workplaces as an alternative.

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The on-site examinations will solely resume when the pandemic state of affairs has stabilized, Ms. Constant stated, including that the agency has not noticed a lower in suspicious-transaction reporting.

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About the Author: Daniel