(Toronto) The head of Canada’s financial sector watchdog says his organization would be more vigilant in monitoring money laundering.
Peter Routledge, who heads the Office of the Superintendent of Financial Institutions (OSFI), acknowledged that regulators and banks need to catch up on their knowledge of how criminals try to move funds.
“The sophistication of money laundering techniques, with the development of artificial intelligence and deepfake, has somewhat outstripped regulators and financial institutions,” he declared at the conference on TD Securities financial services in Toronto.
“Not so much that we can’t make adjustments in a year or two to tighten things up, but enough that we have to move, and we are moving,” he continues.
Routledge says the regulator is also focusing more on this issue after Parliament amended OSFI’s mandate last summer to explicitly include oversight of how financial institutions protect themselves against threats to their integrity and security.
The Financial Transactions and Reports Analysis Center of Canada (FINTRAC), Canada’s financial intelligence agency, has also reported increased monitoring on this front. In December, the agency fined RBC Bank $7.4 million and CIBC $1.3 million for non-compliance with anti-money laundering and anti-terrorism financing measures.
In comparison, in the 2022-2023 financial year it imposed total fines of 1.1 million across all business sectors.
Mr. Routledge said OSFI would work more closely with FINTRAC as digitalization and the more integrated global economy bring higher risks of money laundering.
The regulator will also convey its message to financial institutions that they need to step up their efforts to combat this problem, he said in a press briefing after the event.
“I can tell you that in the future we will definitely do it. We will tell boards that an essential part of your responsibility is to ensure that your institutions comply with the laws and jurisdictions in which they operate. Institutions must step up their efforts to ensure compliance with anti-money laundering laws. »
The scale of money laundering in Canada could range between $45 billion and $113 billion, according to an estimate by the Criminal Intelligence Service of Canada in a 2020 report, based on UN estimates of between 2% and 5%. % of global GDP is laundered every year.
Mr Routledge said the regulator is also focusing more on climate change risks, saying it is fundamentally a financial risk.
The regulator has already asked big banks to prepare climate change information and transition plans, which will then inform any decisions on capital buffers and other potential measures, but this will be a multi-year process, it said. -he.
“We don’t expect a perfect transition plan tomorrow, but we do expect boards to consider different transition scenarios and then begin to develop plans to accommodate those assumptions.”
OSFI’s mandate focuses on the financial risk of climate change, but the organization does not have a mandate to develop climate policies.
“We do not see OSFI’s role as an institution that is supposed to initiate climate policy. We are an institution intended to promote sound management of new and emerging risks. »