Canada to create powerful financial crimes agency as US weakens its approach

Canada is to establish a new and powerful law enforcement agency to investigate financial crime, in stark contrast to the US, where weakened federal investigators have struggled to pursue fraudsters and the White House has pardoned convicted money launderers.

A bill to create the Financial Crimes Agency (FCA) completed its first reading in parliament this week. The legislation was introduced by the governing Liberals and with their parliamentary majority, the party is likely to move the it through both levels of government quickly.

The new agency, tasked with investigating and prosecuting financial crimes, is the result of a public inquiry that found Canada lacked a cohesive strategy against money laundering, placing it behind its international peers.

Jessica Davis, a former intelligence analyst with Canada’s spy agency who focuses terrorism and illicit financing, said: “The fact we’re actually seeing the creation [of a] new enforcement agency is a meaningful investment and hopefully signals the understanding of the seriousness of the challenge.”

In addition to a new law enforcement agency, Canada will ban cryptocurrency ATMs, which officials say have been used by scammers to defraud victims and by criminals to launder the proceeds of crime. Canada has nearly 4,000 cryptocurrency ATMs, the most per capita in the world.

For more than a quarter of a century, the financial transactions and reports analysis centre (Fintrac) has functioned as Canada’s financial intelligence unit. Last year, the agency uncovered $45bn in transactions from money laundering, counterterrorist financing, sanctions and evasion disclosures.

“It’s a figure that could be too high or far too low – we just don’t fully know the scope of financial crime in this country,” said Davis, who runs the consulting firm Insight Threat Intelligence.

Fintrac does not track and arrest criminals, instead handing off its investigations to the police and prosecutors. Under the new legislation, the newly formed FCA will investigate and prosecute – a move that lessens the scope and mandate of Fintrac and the Royal Canadian Mounted Police, the country’s federal law-enforcement authority.

“The challenge for the is that RCMP has been unable and unwilling to actually investigate and sustain investigations related to financial crimes,” said Davis. “There is a lack of funding, a lack of skills, lack of resources and a lack of political will. But financial crimes investigations are long, complex and require sustained resources, which I’m hopeful we’re now going to see put in place.”

A 2024 report on the scale of financial crimes estimated that more than US$3tn in illicit funds had moved through the global financial system in the previous year. Among the largest culprits were money laundering for human and drug trafficking, as well as terrorist financing. A 2024 report from the US treasury department found those efforts had had “devastating economic and social impact” on citizens.

The Canadian effort marks a stark contrast to the approach taken by the current US administration to the scourge of financial crime. Donald Trump’s government issued a high-profile pardon of Changpeng Zhao after the self-styled “king” of cryptocurrency pleaded guilty to money laundering charges. His company, Binance, had been ordered to pay a record $4.3bn penalty for its role in facilitating terrorist financing.

In a January letter to federal watchdogs, senior Democrats called for an investigation into Trump’s decision to shift more than 25,000 personnel away from investigating fraud, tax evasion and money laundering in favour of immigration enforcement.

“The Trump administration is letting white-collar criminals off the hook for all kinds of wrongdoing,” senator Elizabeth Warren, from Massachusetts, said in a statement. “Instead of protecting American families from fraud and predatory behaviour, the administration is diverting resources to pursue its inhumane immigration agenda. Nobody is above the law, and the Trump administration needs to stop treating white-collar criminals with kid gloves.”

“Canada and the US are diverging,” said Davis, adding that the US was still “far ahead of us in terms of its ability to prosecute and invest, investigate and prosecute” financial crimes. “We’re still playing quite a bit of catchup now. Hopefully Canada will shore up our own abilities to protect Canada. Because the things that happen in the US do tend to happen in Canada. And so this new agency is a bulwark against that.”

The creation of a new law enforcement agency was applauded by anti-corruption groups. Salvator Cusimano, the executive director of Transparency International Canada, said: “The [Canadian] government is proposing an ambitious but realistic mandate for this agency, which bodes well as a much-needed first step in improving our enforcement of financial crimes.

“Once established, the agency must coordinate closely with other enforcement and regulatory agencies across the country, and build on their efforts, if it is to achieve its potential.”

It is unclear how easily the agency will work alongside the RCMP, where it will be based and whether it will draw key resources from other units.

Davis said: “This agency is going to matters to Canadians because when you start to combine things like economic pressures, the cost of living and really difficult sort of existence for everyday people, we start to have less tolerance for people making money off of us.

“This is a massive and necessary investment for Canada. But we’ll also have to keep pressuring the government to continue to fund it, continue to prioritise it, to actually get some of those outcomes that we’re looking for.”