Canadian FIU Wants ‘Real-time’ Flagging of High-Priority Illicit Payments

By Fred Williams

Canadian financial institutions must begin reporting terrorist financing-linked payments and other high-priority suspicious transactions closer to “real time,” the head of the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, said Thursday.

Speaking at The Assembly Canada, an annual conference in Toronto hosted by ACAMS, Fintrac Director Sarah Paquet issued a call to action for banks, money services businesses and other companies subject to the reporting requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, or PCMLTFA, to update their systems for reviewing transactions and more quickly flag those that investigators should follow-up quickly.

“I don’t think the status quo is an option,” Paquet told attendees of the conference. “Threats are emerging at an alarming pace—sometimes we wonder, ‘What can we do about it?’ ”

Paquet’s appeal for expedited reporting precedes an evaluation of Canada’s rules and enforcement against illicit finance by the Financial Action Task Force in 2025. After an evaluation seven years ago, FATF criticized Canada for failing to secure enough convictions against money launderers and seize enough assets from criminals, among other shortcomings.

“The Canadian FIU [financial intelligence unit], Fintrac, has extensive powers and responsibilities concerning suspected money laundering and terrorist financing,” FATF concluded at the time. “However, there are serious issues in relation to its effectiveness.”

In the runup to FATF’s next evaluation of Canada, Fintrac aims to rapidly supply investigators high-priority, higher-quality case leads by further automating its analysis of suspicious transaction reports, or STRs, and giving institutions feedback on their submissions closer to real time.

“You are going to say, ‘Wow, this is aspirational,’ ” Paquet told attendees Thursday. “But is it doable? Absolutely.”

Fintrac disclosed in an annual report two years ago that artificial intelligence will play a key role in the agency’s automation initiative.

Speeding up the analysis and supply of STRs is critical to Canadian investigators, who, unlike their U.S. counterparts, lack authority to access such reports directly, without assistance from their country’s FIU.

A compliance officer interviewed by welcomed Fintrac’s plans for faster feedback on STRs, but questioned whether real-time identification and flagging of high-priority suspicious transactions by the financial services industry is realistic in the near term.

Artificial intelligence is not yet capable of reliably assessing which suspicious transactions constitute the highest priority, the compliance officer said on condition of anonymity.

“It takes a while for new things to come into play,” the compliance officer said.

The PCMLTFA, the foundation of Canada’s anti-money laundering and counterterrorist financing regime, requires banks and other financial institutions to file STRs “as soon as practicable” after they establish reasonable grounds to view the payments as illicit.

Fintrac does not have explicit authority to require real-time submissions of STRs.

In practice, “closer to real-time” reporting may mean “within a few days” of a transaction, Paquet told after delivering her remarks.

But even a 30-day wait for a STR would mark a significant improvement over the 100-day wait Fintrac has experienced with some financial institutions, said Paquet.

Such delays give fraudsters and traffickers time to target more victims and move their profits further out of reach.

Fintrac, which issued six notices of violation last fiscal year and assessed only $1.1 million in fines, tends to pursue enforcement actions only in response to egregious or successive infractions.

But financial institutions should not take the policy for granted.

“We are stepping up our enforcement level,” Paquet told attendees Thursday. “We are going to hound the businesses that are not doing their part.”

Contact Fred Williams at

Topics : Anti-money laundering , Counterterrorist Financing
Source: Canada , Canada: FINTRAC
Document Date: November 16, 2023