Canadian regulator warns of ‘fintech’ companies’ vulnerability to trade-based financial crime

The director of Canada’s anti-money laundering (AML) watchdog says the agency is studying how vulnerable certain emerging technologies, such as those being pioneered by some financial technology or ‘fintech’ startups, are to financial crime.

Financial Transactions and Reports Analysis Centre of Canada director, Gerald Cossette, is particularly concerned about trade-based money laundering risks.

Causes for concern
Cossette is calling on Canada’s government to encourage fintech companies while balancing this encouragement by taking steps to protect the integrity and stability of the financial system.

While some fintech solutions are rooted in traditional technologies, others are “more revolutionary in nature,” says Cossette.

“In these cases there are some concerns that new entrants and technologies are disrupting traditional trusted intermediaries and existing business models, ultimately challenging Canada’s existing regulatory paradigm,” he says.

Financial crime
“We are assessing the vulnerabilities of these new technologies to criminal exploitation, such as how they can be used in trade-based money laundering, for which mechanism and detection techniques are not as well understood as they should be,” he says.

Striking the right balance between promoting innovation and preventing financial crime is going to require collaboration with industry, Cossette concludes.

Categories: Trade Based Financial crimes News

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