Speaking points for Sarah Paquet, Director and CEO of FINTRAC at the C.D. Howe Institute

Check against delivery I am delighted to have the opportunity to engage with one of Canada’s most respected research and policy think tanks. Before I begin, I want to acknowledge that I am speaking to you from the traditional territory of many nations, and what is now home to many diverse First Nations, Inuit and Métis peoples. As we confront unparalleled changes in the world order – what the Prime Minister has referred to as a global rupture – it is important that we recognize, leverage and defend our strengths as a country. Canada is an open society, with strong democratic traditions and robust human rights protections. We have the tenth largest economy in the world. We have open and extensive trade with countries around the world. We have a large, mature and stable financial system. And we have world-leading Canadian businesses in tech, financial services, resource and other sectors. That’s all very good news. Now the bad news: foreign adversaries, transnational organized crime groups, international terrorist networks and others are working hard to exploit Canada’s strengths and good fortune. There are more than 4,000 organized crime groups operating across the country. A number of these groups pose a high threat due to their entrenched networks and involvement in numerous types of criminal activities, all of which generate billions of dollars in profits every year. Their pursuit of profit – whether it’s from extortion, fraud or drug trafficking – threatens our communities and our most vulnerable citizens. Last fall, the RCMP in Ontario recognized FINTRAC’s contribution in dismantling one of the largest known drug trafficking operations on the dark web in Canadian history. Seven individuals were charged with dozens of offences and police seized 75 kilograms of illegal drugs and 10,000 pills. It is not hard to imagine the damage these drugs would have done in communities across Canada. Organized crime also threatens Canadian businesses. According to a recent KPMG survey, 80 percent of businesses polled said they lost between one and five percent of their profits to AI-powered fraud attacks. Ransomware attacks on businesses also continue to increase in scope, frequency and complexity. A study by cybersecurity firm Palo Alto Networks found that the average ransom paid by Canadian businesses was $1.13 million. To enjoy the financial benefits of their crimes against Canadians and Canadian businesses and expand their illicit infrastructure and networks, organized crime groups must launder their proceeds through Canada’s financial system. Large-scale and sophisticated money laundering operations in Canada almost always involve third parties, including professional enablers such as lawyers and accountants. These individuals have the credentials, training, infrastructure or other specialized knowledge to undertake complex money laundering schemes and facilitate illicit financial flows. Organized crime groups also leverage advanced technology to facilitate their crimes and launder their profits. For example, the use of chatbots and AI-generated emails is escalating fraud and other scams, causing greater harm to more victims. Criminals are using cryptocurrencies to obtain payments related to fraud and ransomware attacks, and to distance the proceeds from their criminal source. Crypto users have a high degree of anonymity and global reach. This allows for rapid cross-border transfers and access to high-risk jurisdictions. Beyond threatening Canadians and Canadian businesses, money laundering undermines the integrity of our financial system and harms Canada’s legitimate economy, which our businesses rely upon: it distorts market prices, creates unfair competition and damages the reputation of our financial sector. More broadly, money laundering fosters corruption and leads to the erosion of public institutions and the rule of law, lower government revenues and a loss of credibility and influence