Not so long ago, Canadian Government introduced the new “Know Your Client” requirements in order to address the ever-growing problem of so called money laundering in Canada.
What is money laundering and why it needs law to deal with it?
Money laundering proves to be a problem in almost every country in the world and typially involves the process of transferring of big sums of money through several countries so to hide its country of origin. When transferred in this manner, it looks to authorities that the money came from a legal source in a legal way, when in fact it may have been obtained from an illegal or criminal activity. In other words, because any money obtained illegally cannot be used without connecting its new owner to the illegal activity through which it was obtained (due to the paper trail that any transaction leaves), the money is laundered in the way that hides the paper trail and thus has no direct connection to that illegal activity and can be used freely .
Money laundering is a subject of attention to Canadian government due to its negative effect on economy, as well as other aspects of normal growth and development of financial activities in a country. We will discuss these in a separate post.
Incredibly enough, we just learned recently from The Globe and Mail that while over the years the reported number of money-laundering activities has considerably increased, “law enforcement has had little success in finding the culprits, much less putting them behind bars”. To be more exact, a recent bulletin published by Statistics Canada discloses that while only less than one fifth of all cases have been identified, convictions have been successful a mere one third of the time.
The Globe says “The RCMP estimates that between $5-billion and $15-billion is laundered in Canada every year, as criminals try to “clean” their dirty money through the financial system”.
The situation seems to be far from encouraging. Financial institutions and lenders continue to be the target of money laundering activities, lawyers continue to serve clients without conducting proper identity checks prior to onboarding them, and while the law provides clear guidelines on how to prevent money laundering through “Know Your Client” regulations, the process seems to be cumbersome and time consuming.
We at ESC are dedicated to easing this burden for our clients. We offer fast and convenient services to ensure that your organization becomes compliant with the “Know Your Client” regulations, and our services are fast, easy and secure.
Contact us for more information.
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