Federal investigative agencies have done little to address trade-based money laundering (TBML) according to the final version of a report commissioned by British Columbia into money laundering following revelations of widespread trade-based financial crime in the Canadian province (Trade-based Financial Crime, 12 June 2019).

“This is highly problematic, considering the volume of illicit funds that can be laundered in this way,” says the Cullen Commission Final Report, published on 15 June.

RCMP failings

While the Royal Canadian Mounted Police (RCMP), which has primary responsibility for the investigation of TBML, has recently increased the number of investigators examining money laundering issues, it appears there have been no successful TBML investigations or prosecutions in recent years.

The report, the result of an inquiry headed by supreme court judge Austin Cullen, makes clear that the federal government and its agencies had failed British Columbia.

Working group collapse

The report describes how a federal TBML working group collapsed because the key person left the RCMP.

Cullen stops short of suggesting that this is perhaps an indication that TBML is not a federal priority.

Suggested remedies

“A number of steps could be taken at the federal level to address trade-based money laundering, which the province should encourage,” according to the report.

It suggests a trade transparency unit is one of the most promising options. Such a unit would collect customs and trade data and share it with other countries, in order to identify anomalies that could demonstrate over- and under-invoicing.

Advanced data analytics can be used to identify anomalies in Canadian trade data and to detect and measure the flow of illicit funds without needing to examine every shipment of goods into and out of the country. Improved information sharing is also crucial to investigations of TBML the report concludes.

Report recommendations

Without a brief to address federal weaknesses, the Cullen inquiry’s two key recommendations are the creation of an AML Commissioner and a dedicated provincial money laundering intelligence and investigation unit.

The inquiry was triggered by a probe by independent investigator Peter German into illicit fund flows that revealed widespread TBML through the export to buyers in China of luxury cars purchased from motor dealers in British Colombia (Trade-based Financial Crime, 24 May 2019).

The Cullen Commission Final Report can be found here.

Categories: Trade Based Financial crimes News

Tags: Canada, RCMP, report, TBML, trade-based financial crimes