To Avoid Market Scams, Offer Enforcers More Legal Tools

The Globe and Mail’s current series on market scams highlights the significant issues facing enforcement companies. There is no absence of will or capability on the part of those entrusted with the job of securing financiers. Their lot is among disappointment about the constraints that avoid them from doing the job. Canada has long coped with a system that supplies a simple way for scammers to conceal their ill-gotten gains, making them unattainable to enforcement firms even when the criminals are captured. We enable the presence of business vehicles that provide secrecy to their owners so that those owners can conceal money from the authorities. Maybe this has been permitted to exist because the very same tool is used by the very abundant, who also wish to conceal their money from the authorities to safeguard their wealth from analysis and federal government gain access to.

The outcome is that Canada has established a credibility as an exceptional place to wash money acquired through criminal activity. We prefer to think of ourselves as unique from unethical overseas secrecy jurisdictions that make big earnings handling prohibited funds while concealing them from police. Regretfully, we are not unique from overseas secrecy jurisdictions. We are one. Up until this issue is taken seriously, the failure of regulators to recuperate funds will continue. When Canada’s anti-money-laundering firm, FINTRAC, was being developed, which only took place because Canada remained in threat of being blacklisted by the IMF’S Financial Action Task Force (FATF), there was significant lobbying of the federal government to reduce the capability of FINTRAC to in fact do the job.

Canadian banks are enabled to handle overseas financial organizations without having any info regarding who the real owners of the funds they are handling truly are. This develops a substantial barrier to enforcement authorities attempting to recuperate taken money for victims. Legal representatives safeguarding this system typically react that there are many genuine factors for people using these accounts. The conversation always appears to end there, with no factor to consider regarding the huge damage to financiers, expenses to the economy and the damage to our global stability that the perpetuation of this system motivates. It is a basic truth: if we permit Canadians and banks to handle confidential accounts, scams artists will have a clear opportunity to conceal money from their victims and from enforcement companies.

While U.S. criminal-law authorities are appropriately credited with doing a much better job than their Canadian equivalents at safeguarding the financial markets, they can do much better because of extreme legal constraints which exist in Canada that do not constrain enforcement in the United States. In the United States, the Securities and Exchange Commission can carry out an examination into financial misbehavior using its regulative powers– which are not offered to criminal-law detectives, and where it figures out there suffices proof to call for criminal-enforcement action, they can just turn the fruits of their regulative examination over to criminal-law enforcement firms. Having the advantage of the proof collected by the regulator, U.S. police has a much easier course to examine. In Canada, the dominating view of the law is that proof gotten through regulative powers might not normally be offered to or used by criminal-law-enforcement firms.

Without that proof, criminal-enforcement companies do not have access to the details required to examine the criminal offense and do not have the legal tools needed to collect that proof. The Supreme Court of Canada long back stated that those who take part in the capital markets have a very low expectation of privacy, yet criminal private investigators stay shackled by a system that enables financial crooks to conceal behind the very greatest levels of privacy.

Canadian provinces are signatories to the multilateral memorandum of understanding (MMOU) of the International Organization of Securities Commissions. This MMOU enables foreign securities regulators to turn over proof collected by Canadian regulators to foreign criminal-law authorities to use in their examinations. That exact same proof, nevertheless, might not be used by our own law-enforcement companies to examine criminal activities versus Canadians. Up until our laws are generated line with those of the United States, this severe variation in criminal enforcement will not change.