Canada's FinTrac Public Info Limited by Canadian Law

By Jonathan Winer

Andrew Cochran has highlighted an important problem in assessing the effectiveness of Canada's Financial Intelligence Unit, FINTRAC, namely, the lack of feedback received in Canada by the financial institutions reporting to it.

Under Canadian law, FINTRAC is prohibited from saying very much publicly about the cases it builds on the basis of reporting from the country's financial institutions. To protect privacy, Canada deliberatedly structured its law so that reports made to FINTRAC by financial instituions must first be investigated by FINTRAC. The information is then made available to Canadian law enforcement and/or intelligence agencies, that is, the RCMP and CSIS, only after FINTRAC has determined that there are sufficient indicators of suspicious (criminal or terrorist) activity to warrant referral.

In late October, FINTRAC reported that over the past year it had referred a total of about $10 billion in transactions for further investigation in some 193 cases. Of that amount, 33 cases and $209 million involved suspected terrorist finance cases. Thus, the amount of funds relating to terrorist finance was some 2 percent of the total.

From there, the mission of further investigation, prosecution, or other activity falls entirely to other Canadian agencies.

FinTrac has long prided itself on being intelligence driven, and on having pioneered in the use of artificial intelligence pattern spotting as a foundation for the further reviews it takes before making a referral -- termed a "disclosure" under Canadian law -- to the two Canadian agencies to whom it is allowed to make such a referral, and to its foreign counterparts.

Unfortunately, Canadian law leaves FinTrac poorly situated to provide details on what it doing to anyone else. As described by its director, Horst Inscher, to Canada's Parliament a year ago:

"Our Act was carefully crafted to provide the highest possible protection for personal information while also making it possible for some information to be disclosed to law enforcement to facilitate the detection and deterrence of serious criminal activity. The protections begin with the very nature of the institutional arrangements that establish FINTRAC as an independent and arm’s length entity that receives and analyzes reported financial transaction information and that can only pass on such information if particular tests are met. The information we hold can not be accessed by any other outside body, except by a court-granted production order, and the Act provides for serious criminal penalties to be applied to the unauthorized disclosure of information."

The privacy protections have not merely prevented disclosure of information to the financial institutions that object to the "black hole" which they view disclosure to FINTRAC to represent. Until the end of last year, with the enactment of reforms to Canada's anti-money laundering law, severely limited the amount and type of information that FINTRAC was permitted to share with the RCMP and CSIS. Before these reforms were enacted last December, FINTRAC was prohibited from telling Canadian law enforcement or intelligence that it knew that a person involved in a particular suspicious transaction had a criminal record, or who it believed to be the kingpin or ringleader of a terrorist finance scheme.

Now, Canada has corrected its disclosure law to tilt it towards FINTRAC being able to share more information with other government agencies in Canada. But privacy still trumps publicity when it comes to telling the public more than the absolute statistical minimum about what is going on. This is obviously not helpful to FINTRAC's public image. Over time, the results of prosecutions and intelligence operations may, perhaps, provide a fuller picture of how well Canada's FIU is actually working.

.

TrackBack