The Anti-Money Laundering Complex in Canada – A Private-public Approach to Governance. The compliance role of financial institutions

Abstract

In Canada, anti-money laundering has developed into a concerted effort between public sector agencies and the private sector to prevent criminal funds from corrupting the financial system. Based on internationally accepted norms, the Canadian legislation has placed bankers, accountants and a handful of other professions as the first line of defence against the laundering of criminal proceeds by delegating them the responsibility to implement policy. These business actors are mandated to maintain records of their clients and monitor their financial transactions, then report suspicious financial activity to the authorities. This responsibility clashes with the inherent motive of the private sector to attract customers and accumulate profit; however, the threat of prosecution, a need to remain competitive and reputational risk are meant to motivate them to comply with their entrusted new role as crime fighters. This paper analyzes the role of business actors as agents of surveillance in the fight against money laundering/ terrorism financing and discusses the effectiveness of the system as dependent on the compliance of these institutions.