Skip to main content

Follow ISN on

The Best
Just Got Better.

New Name. Same Standards. Exceptional Results.
Learn more about how joining ISN has enhanced our services here.


The following article was posted by Postmedia News. 

The federal government is being urged to adopt new regulations that would force car dealers, construction and home renovation companies, race-tracks, private automated-banking machine operators and law firms to report cash transactions that exceed $7,500 to Canada's financial intelligence agency.

Supporters say such measures would bolster efforts to combat organized crime and thwart money-laundering and terrorist financing activities.

But some industry representatives say they worry that new regulations could be too onerous for small businesses and point out that not everyone who pays in cash is necessarily involved in nefarious activity.

Federal law already requires banks, money service businesses, securities brokers, accountants, real estate brokers and casinos to report to the Financial Transactions and Reports Analysis Centre (FIN-TRAC) all cash transactions greater than $10,000, as well as transactions that they suspect could be linked to money laundering or terrorism.

If a deal looks shady, FIN-TRAC's analysts will forward the information to law enforcement. Police can also query FINTRAC for records to build financial profiles of individuals or groups they're investigating.

But in a report on the state of organized crime tabled earlier this year, the House of Commons Standing Committee on Justice and Human Rights noted that crime groups don't always deposit their proceeds into financial institutions. Instead, they make large cash purchases on things like cars and home renovations. That's why such businesses should be required to report large cash transactions to FINTRAC, the committee said in its report.

The committee cited the testimony of Ken Froese, a forensic accountant in Toronto who has helped police investigate Hells Angels members. Froese testified that investigators often get only a fragmented picture of organized crime members' activities from their banking and credit card records.

"Their way of concealing things is to use cash when they can," he said in an interview. "In our experience, we've seen large payments from organized crime participants made in home improvements and vehicles."

A spokeswoman for Justice Minister Rob Nicholson said Thursday that the government is committed to examining and developing new measures to tackle organized crime and will consider all recommendations.

Huw Williams, spokesman for the Canadian Automobile Dealers Association, said his group welcomes measures to reduce organized crime, as long as they're reasonable.

"There are consumers who like to use cash transactions," he said. "My mother bought every one of her cars in cash."

Williams added that auto dealers don't have the level of staff that large banks do to take on the extra paperwork.

Dave Foster of the Canadian Home Builders' Association, said he doubts his members would be overjoyed with more regulation, but if it helps to rein in under-ground activity, "they may look more favourably to it."

Lawmakers just need to ensure that small businesses aren't buried under "mountains of ambiguity and paperwork," especially when they're already required to report to the Canada Revenue Agency, he said.

Chris Chandler, chairman of the Canadian Bank Machine Association, said private ATM operators are already required to scrutinize "cash owners" - those who supply the cash that are loaded into the machines.

"Any criminal looking to put proceeds of crime in an ATM should think twice because there's extensive documentation related to those cash flows."

Footnote: Written by Douglas Quan, Postmedia News, July 27, 2012