Monday, September 20, 2004

Canada a 'Haven' For Criminals

Canada a 'haven' for criminals: survey
Billions being laundered each year; lenient sentencing partly to blame, KPMG says
Monday, Sep 20, 2004

Canada's stable financial system and lenient sentencing guidelines make it a "haven" for drug traffickers and other criminals looking to launder their money, according to a top official with accounting firm KPMG LLP.
James Hunter, president of KPMG Forensic in Toronto, estimated that billions of dollars are laundered every year in this country, which he called an "attractive environment" because of its relatively light treatment of offenders.
Mr. Hunter's comments were in relation to a new survey by KPMG, which found that two-thirds of the world's banks have reported an increase in the number of suspected money-laundering cases they forwarded to authorities over the past three years. The report, published today, polled 209 respondents from 41 countries, and included five of Canada's major banks.
Most of the banks that were interviewed predicted their spending on training and technology to combat this illegal flow of money will swell more than 40 per cent over the next three years. Mr. Hunter said banks are making huge investments in this area, in large part to avoid the kind of reputational damage that might occur if a bank's name were publicly linked to terrorist financing or the drug trade.
These investments tend to be very expensive, since much of the training must occur on the local branch level, where money launderers tend to strike.
"What really galvanized people were the events of 9/11," he said. "The reputational risk affects the stock price, it drives investors [and] depositors away. No Canadian bank wants that."
The heightened vigilance of the banking sector has resulted in the dramatic increase of cases reported to police each year, but respondents to the survey suggested law enforcement officials were having difficulty coping with the larger volume of reports. The vast majority of those surveyed -- 84 per cent -- said they are able to manage the financial burden of expanding their anti-money-laundering abilities.
Globally, KPMG estimates that money-laundering activity accounts for between $500-billion (U.S.) and $1-trillion annually, but the firm does not break out specific numbers for Canada.
Mr. Hunter said that by far the biggest source of money-laundering proceeds dumped into the Canadian banking system each year are from drug trafficking.