Issue #1 /
April 16, 2020
What's going on this week?
Welcome to the first edition of our newsletter. On a biweekly basis, we
deliver thought-provoking content to help you make sense of the world —
through a financial crime perspective. To connect with our team, hit reply
to this email. Happy Reading!
COVID-19 and the Changing Landscape of Financial Crime
For good reason, focus these days has been on the alarming events
concerning the COVID-19 pandemic. Globally, the number of coronavirus
surpassed 2 million
this week. Simultaneously, the number of COVID-19-related fraud cases has
been on the rise too. According to Time magazine, the United
Kingdom’s National Fraud Intelligence Bureau has reported
losses amounting to more than USD 1.1 million as a result of
Fraudsters thrive in environments filled with fear and uncertainty, much
like the world we are living in at the moment. The crimes are no different
from the ones you have heard before — phishing scams, mobile malware,
malicious websites — all tailored to the current pandemic.
Where have all the masks gone?
Earlier this week, Interpol
released a statement
on an elaborate fraudulent scheme the German health authorities had found
themselves embroiled in amounting to almost EUR 1.5 million. Using
legitimate-looking websites and a chain of emails to mask the identities
of the ultimate recipients of the scam, fraudsters played to sudden border
closures within the European Union and the demand for medical supplies as
the virus spread.
have sparked around the world, as consumers dashed to find
of obtaining hand sanitizers, alcohol disinfectants and the like.
One thing the virus has definitely exposed is vulnerabilities in
traditional transaction monitoring that rely on face-to-face interaction.
Financial regulating bodies, such as the
Financial Crimes Enforcement Network
Financial Action Task Force, have unanimously released statements over the past month to their
communities on their approach to the crisis and warning the public of
potential scams during this time. However, in the age of social
distancing, this has also created opportunities for regulators to innovate
rapidly and think ahead of ways we can create robust models for risk
screening and sharing of financial crime related matters across borders in
Money Laundering Inquiry
It’s been years since Canada earned its reputation as
the newest tax haven, thanks to ‘snow washing’, a way of exploiting the nation’s clean
reputation to generate a false sense of legitimacy and using secrecy laws
similar to those in countries
like Panama and the British Virgin Islands. In British Columbia, the stunning most-Western province of Canada,
journalists have exposed
how crime and money laundering have manifested in casino schemes, luxury
cars and exorbitantly priced real estate, notably in Vancouver. This has
comprehensive investigations and reports
that tie into long standing gang activity and regulatory failures,
aggravating the public’s need for accountability.
Many are left wondering how Canada could harbour such insidious and
What is the Cullen Commission?
Last May, the premier of British Columbia John Horgan announced
The British Columbia Money Laundering Commission. It is led by British Columbia Supreme Court Justice Austin Cullen,
hence the name.
It is the first money laundering public inquiry in Canada and has a tight
timeline of two years. An interim and final report are scheduled to be
delivered November 2020 and May 2021, respectively. The next provincial
election is scheduled for
October 2021, giving a political context for its relatively fast deadline.
Public inquiries are generally expensive and prone to extensions — for
Budget 2020, the province’s three-year-fiscal plan has announced a commitment of $11
million. While some critics believe that the
extensive reports by experts
are enough, others point to the success of previous commissions, like
Quebec’s Charbonneau Commission
as an encouraging example. This noteworthy commission, which tackled
corruption in Quebec's construction industry resulted in arrests, new
regulatory body changes, political resignations and protections for
whistleblowers. The Charbonneau Commission was a 4 year undertaking that
cost nearly $45 million.
Either way, with one poll finding that
90 percent of British Columbians
consider money laundering a problem in their province (higher than the
average Canadian) it’s clear there is a growing awareness and intolerance.
Experts have already noted the dismal track record of the justice system —
since 2012, only 10 people have been convicted of money laundering in
British Columbia. Canada is also said to
of money laundering due to weak rules and penalties, a shocking
realization that beckons a wake up call.
What brought British Columbia to this point though? In following issues we
explore the independent reviews that prompted the Cullen Commission’s
creation, while tracking the hearing’s developments.