Canada’s fight against financial crimes is receiving a major boost from artificial intelligence (AI), as the country’s anti-money laundering agency, FINTRAC, looks to revolutionize its approach. By leveraging the power of AI, FINTRAC aims to enhance its ability to detect suspicious transactions and combat money laundering and terrorist financing more effectively.
In a recent interview with Reuters, Donna Achimov, Deputy Director for Supervision at FINTRAC, emphasized the importance of AI in empowering humans to analyze vast amounts of data and identify potentially fraudulent activities. “AI is allowing us to analyze much more data than ever before and making it easier to detect more suspicious activity,” Achimov said.
The increased adoption of AI comes on the heels of FINTRAC’s record-setting fines imposed on Royal Bank of Canada and CIBC, Canada’s two largest banks. The fines, totaling CAD 9 million (USD 6.7 million), were issued for violations such as failing to submit suspicious transaction reports. These penalties demonstrate FINTRAC’s commitment to cracking down on financial crimes and reinforce the agency’s determination to strengthen its enforcement activities.
Canada, despite its reputation as a law-abiding democracy, is not immune to the challenges of money laundering. Think tanks estimate that between CAD 100 billion and CAD 130 billion is laundered annually in the country. To address this issue, FINTRAC has been actively increasing its staffing levels, with a 28% increase in personnel over the past two years. This bolstered workforce, coupled with the implementation of AI, enables the agency to work in real-time and proactively mitigate money laundering and terrorist financing risks.
To stay ahead of the evolving landscape of financial crimes, FINTRAC is exploring various strategies. One approach involves leveraging new technology to identify suspicious transactions. Additionally, the agency is considering partnerships with financial institutions to further lower risks. By collaborating with banks, FINTRAC hopes to tap into their expertise and resources to enhance anti-money laundering measures.
In the 2022-2023 financial year, FINTRAC reported an increase in the number of suspicious transactions, reaching 560,858 compared to 585,853 the previous year. This represents a significant jump from the 114,422 reported in 2015-2016. Notably, approximately 75% of these suspicious transactions were flagged by financial institutions themselves, highlighting the importance of cooperation between FINTRAC and the banking sector.
Recognizing the need for ongoing vigilance, FINTRAC has ramped up its engagement with financial institutions. It now holds quarterly meetings with larger banks and maintains regular communication with small and medium-sized banks. By fostering stronger relationships, FINTRAC aims to enhance information sharing and collaboration, ultimately strengthening the collective fight against financial crimes.
FINTRAC’s intensified focus on combating money laundering coincides with a rare investigation and likely fine faced by TD, one of Canada’s major banks, from the U.S. Department of Justice. This development, along with FINTRAC’s decision to publicly name the banks involved in violations rather than handle penalties privately, signals a shift towards increased enforcement activities and heightened scrutiny of financial institutions.
Garry Clement, a financial crime prevention expert and CEO of Clement Advisory Group, highlights the importance of collective effort in safeguarding financial institutions from illicit activities. “Everybody’s got to take a closer look … we got to make sure that we’ve got our i’s dotted, cross our t’s and we’re not letting that dirty money get into our institutions,” Clement emphasized.
As Canada continues to grapple with the challenges of money laundering, the combination of AI technology and strengthened collaboration between FINTRAC and financial institutions holds promise for a more robust and effective response to financial crimes. By harnessing the power of AI, Canada’s anti-money laundering efforts are poised to undergo a transformative revolution, ensuring the integrity of the country’s financial system for years to come.
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