FINTRAC increases use of artificial intelligence to fight financial crime

The Financial Transactions and Reports Analysis Center of Canada (FINTRAC) is expanding its use of artificial intelligence (AI) in an effort to increase its fight against financial crime. The agency aims to enhance detection of suspicious transactions through advanced technology. This strategic move follows recent record fines imposed by FINTRAC totaling C$9 million (US$6.7 million) on Royal Bank of Canada and CIBC for suspected failure to report their activities. The fines are part of the $23 million collected since 2008, when FINTRAC was authorized to issue such fines.

Despite Canada’s law-abiding reputation, research firms such as CD Howe say the country faces between C$100 billion and C$130 billion in money laundering annually. Donna Achimov, Deputy Director of Surveillance at FINTRAC, emphasized that artificial intelligence can enable more effective data analysis, thereby increasing the identification of suspicious activities. Working with a financial institution can further reduce risk, she said.

The federal government has increased FINTRAC’s capabilities, including increasing staffing by approximately 28% in fiscal year 2023 compared with the previous two years. These enhancements are part of the agency’s efforts, led by Sarah Paquet, to address money laundering and terrorist financing risks in real time.

The number of suspicious transactions reported in fiscal year 2022-2023 was 560,858, which was slightly lower than the previous year but still significantly higher than the 114,422 transactions reported in fiscal year 2015-2016. Between April and September 2023, 75% of reporting was by financial institutions.

FINTRAC has also stepped up its engagement with banks, holding quarterly meetings with large banks and regular discussions with smaller and mid-sized banks. The heightened scrutiny coincides with a separate U.S. Department of Justice investigation into TD Bank related to its anti-money laundering practices, which was conducted shortly after TD Bank abandoned its acquisition of First Horizon (NYSE: FHN).

Anti-money laundering and legal experts interpreted FINTRAC’s public naming of banks as a sign of increased enforcement activity in the future. Gary Clement, financial crime prevention expert and CEO of Clement Consulting Group, stressed the importance of remaining vigilant to prevent illicit funds from entering financial institutions.

Reuters contributed to this article.

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