OSFI intensifies monitoring of money laundering in Canadian finance

Banks and regulators alike need to keep up with criminals' evolving strategies, says Peter Routledge

OSFI intensifies monitoring of money laundering in Canadian finance

The Office of the Superintendent of Financial Institutions (OSFI) will be stepping up its analysis and monitoring of money laundering in the Canadian financial sector amid intensifying risks, according to the agency’s head Peter Routledge.

OSFI stressed the need for banks and regulators alike to keep pace with the evolving strategies employed by criminals to facilitate illicit fund transfers.

The agency’s strengthened focus came about as a response to parliamentary amendments to OSFI’s mandate last summer, Routledge said at the recent TD Securities Financial Services Conference in Toronto.

In particular, the revisions explicitly tasked OSFI with monitoring the effectiveness of financial institutions’ data integrity and security.

“The sophistication of money laundering techniques in a world of artificial intelligence and deep fakes and all that, has run out ahead a little bit of, certainly regulators, and financial institutions,” Routledge said.

“Not so far that we can’t make adjustments in the next year or two to tighten things up, but enough that we need to move, and we are moving.”

Routledge added that OSFI will be collaborating more closely with Fintrac, Canada’s financial intelligence agency, as increased digitization and a more integrated global economy are amplifying money laundering risks.

Fintrac’s recent steps point to a strengthened commitment to addressing these issues. In December, the agency imposed a $7.4-million penalty on RBC and a $1.3-million penalty on CIBC for non-compliance with anti-money laundering and terrorist financing measures – far outstripping its $1.1 million in total issued fines during the 2022-23 financial year.

A 2020 report by Criminal Intelligence Service Canada estimated that the volume of laundered funds in Canada could range anywhere between $45 billion and $113 billion.