Departmental Performance Report 2014–2015

For the period ending March 31, 2015


The original version was signed by
The Honourable William Francis Morneau, P.C., M.P.
Minister of Finance


Table of Contents

Departmental Performance Report - For the period ending March 31, 2015 (PDF version, 247 Kb)


Director's Message

Gérald Cossette, Director

I am pleased to submit to Parliament and Canadians the 2014–15 Departmental Performance Report for the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

Financial intelligence plays a critical role in combatting money laundering, terrorist activities financing and threats to the security of Canada. By working with our regime partners in government, law enforcement, intelligence and national security agencies, prosecutors and thousands of businesses across the country, we are creating an increasingly hostile environment to those who seek to abuse our financial system or who threaten the safety of Canadians.

The past year has been one of impressive achievements: we provided 1,260 disclosures of actionable financial intelligence to our law enforcement and national security partners, the largest number of disclosures FINTRAC has ever provided in one fiscal year.

Our strategic financial intelligence provided analysis and assessments on various groups, countries and activities of interest to Canada's security and intelligence community, as well as to government decision-makers. We strengthened the focus of our intelligence efforts on terrorism financing, producing intelligence reports and research on many subjects, some focusing on the Islamic State of Iraq and the Levant's financing strategies, in particular, the financing available to the terrorist group through its territorial control.

The basis of our Compliance Program is to guide, assess, enforce, and provide feedback to Canadian businesses not only so they meet their legal obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, but also provide us with the information we need to assist our regime partners in protecting Canada and Canadians. We call this 'compliance for intelligence'. FINTRAC's ability to produce quality financial intelligence is entirely dependent on Canadian businesses fulfilling their obligations. In 2014–15, we focussed our efforts on enhancing the quality, quantity and timeliness of the reporting we receive and ensuring that businesses have the tools and the guidance they need to comply with their legal obligations.

FINTRAC's employees are committed to producing high-quality financial intelligence and are motivated by a common purpose: to ensure the safety and security of Canadians and protect Canada's financial system. We continue to modernize our operations, work methods and business processes aiming to achieve an anti-money laundering and anti-terrorism financing regime that meets the expectations of Canadians.

Gérald Cossette
Director


Section I: Organizational Expenditure Overview

Organizational Profile

Minister: The Honourable William Francis Morneau, Minister of Finance

Institutional Head: Gérald Cossette, Director

Ministerial portfolio: Finance

Enabling Instrument: Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17.

Year of Commencement: 2000

Organizational Context

Raison d'être

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada's financial intelligence unit (FIU). The Centre exists to assist in the detection, prevention and deterrence of money laundering and the financing of terrorist activities. FINTRAC's 'value-added' financial intelligence products and compliance functions are a unique contribution to the public safety of Canadians and to the protection of the integrity of Canada's financial system.

FINTRAC is an independent agency that operates at arm's length from the law enforcement agencies and other entities to which it is authorized to disclose financial intelligence. It reports to the Minister of Finance, who is in turn accountable to Parliament for the activities of the Centre. FINTRAC was established by, and operates within, the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations.

Responsibilities

FINTRAC is one of several domestic partners in Canada's anti-money laundering and anti-terrorist financing (AML/ATF) regime, which also includes the Department of Finance as the policy and regime lead, the Royal Canadian Mounted Police (RCMP), the Canadian Security Intelligence Service (CSIS), the Canada Revenue Agency (CRA), the Canada Border Services Agency (CBSA), the Office of the Superintendent of Financial Institutions (OSFI), the Public Prosecution Service of Canada, the Department of Justice, and Public Safety Canada. FINTRAC is also part of the Egmont Group, an international network of financial intelligence units that collaborate and exchange information to combat money laundering and terrorist activity financing.

FINTRAC facilitates the detection, prevention and deterrence of money laundering and terrorist activity financing by engaging in the following activities:

FINTRAC is headquartered in Ottawa, and its Montréal, Toronto and Vancouver regional offices have specific mandates related to ensuring compliance with the PCMLTFA.

Protecting the Privacy of Canadians

The protection of the personal information entrusted to FINTRAC is an overarching and fundamental consideration in all aspects of the Centre's operations. The PCMLTFA establishes stringent rules that govern both the management and disclosure of all information contained in the Centre's transaction reports and other records. All facets of FINTRAC's operations are subject to rigorous security measures that ensure the safeguarding of the Centre's physical premises and IT systems, including the handling, storage and retention of all personal and other sensitive information under its control.

The legislation also establishes that the Centre can only make a financial intelligence disclosure to prescribed police, law enforcement and national security agencies. Furthermore, the PCMLTFA clearly defines what information can be disclosed and sets out specific thresholds that must be met before FINTRAC is authorized to disclose. Any other disclosure of information is prohibited and can result in severe penalties, including a fine of up to $500,000 and/or up to five years' imprisonment for FINTRAC employees or persons conducting work for or on behalf of FINTRAC.

FINTRAC's premises and information systems in Ottawa, Montréal, Toronto and Vancouver are protected by multi-layered and integrated security systems. All personnel including contractors must obtain and maintain a security clearance at the highest level of integrity as a condition of employment. Access to sensitive information is on a need-to-know basis. Responsibilities involving the protection of personal information are clearly communicated and measures are in place to ensure that responsibilities in relation to the protection of personal information are formally acknowledged by all personnel.

Strategic Outcome and Program Alignment Architecture (PAA)

To effectively pursue its mandate, FINTRAC aims to achieve a single Strategic Outcome supported by the Program Activity Architecture (PAA) summarized below.

Organizational Priorities

Priority: Provide valued financial intelligence to our law enforcement and national security partners.

Type:

  • Previously committed to

Program:

  • Financial Intelligence Program

Summary of Progress:

  • In 2014–15, FINTRAC's financial intelligence was used by police, law enforcement and national security regime partners to assist in hundreds of money laundering and terrorist financing investigations in order to confirm existing information and expand the scope of a wide variety of criminal investigations where the origins of the suspected criminal proceeds were linked to drug offences, fraud, tax evasion, customs and excise offences, corruption, human smuggling and trafficking, and other criminal offences.
  • Following the attacks in Ottawa and Saint-Jean-sur-Richelieu in October 2014, FINTRAC strengthened the focus of its intelligence efforts to support the terrorism financing investigations of its law enforcement and national security partners. During the year, the Centre provided a total of 337 disclosures to its partners that related to terrorism financing and threats to the security of Canada.
  • During the year, FINTRAC was publicly identified by several law enforcement agencies as making a valuable contribution to money laundering and terrorism financing investigations. For example, the RCMP's Integrated National Security Enforcement Teams in Ontario and Quebec recognized the Centre's contribution to an investigation on the International Relief Fund for the Afflicted and Needy Canada (IRFAN-Canada), an organization allegedly linked to the terrorist entity Hamas.
  • FINTRAC also continued to support the work of our broader government-wide and international partners through its classified strategic financial intelligence reports on money laundering and terrorism financing activities and trends. Some of the Centre's research and strategic intelligence over the past year has focused on the Islamic State of Iraq and the Levant's key financing strategies, assessing, in particular, the financing available to the terrorist group through its territorial control.
  • Finally, FINTRAC also made significant contributions to the development of a national inherent money laundering and terrorist financing risk assessment, led by the Department of Finance. In addition to helping design the approach for the assessment, FINTRAC contributed strategic financial intelligence that increased the overall understanding of sector vulnerabilities, as well as the relationship between money laundering, terrorist activity financing and predicate offences, and organized crime and terrorist groups.
Priority: Deliver an effective national risk-based compliance program.

Type:

  • Previously committed to

Program:

  • Compliance Program

Summary of Progress:

  • Given the importance of suspicious transaction reporting to FINTRAC's analysis and financial intelligence, the Centre reached out to reporting entities last year to enhance their awareness of their reporting obligations and, more importantly, to strengthen their understanding of what constitutes a useful suspicious transaction report. The Centre also refined its methodology for the assessment of compliance related to suspicious transaction reporting and communicated this broadly to reporting entities. As a result of these efforts, and increased reporting entity commitment, suspicious transaction reporting increased by 11 percent in 2014–15, and the quality of the reports received by FINTRAC improved markedly, strengthening the Centre's ability to generate and disclose financial intelligence.
  • In May 2014, FINTRAC hosted its first Major Reporters Forum, which was attended by Canada's largest financial institutions representing more than 80% of all reports received by FINTRAC. This forum showcased FINTRAC's enhanced approach to assessing the financial entity sector's compliance with suspicious transaction reporting obligations.
  • FINTRAC also hosted its inaugural Casino Forum in February 2015. The one-day event targeted casino reporting entities and other key regime stakeholders, including provincial and religious/charitable gaming bodies, provincial gaming regulators, Ontario Provincial Police, and Finance Canada. The Forum emphasized the critical role that casinos play in the fight against money laundering and terrorist financing, and provided detailed feedback on a number of sector specific interests, including upcoming legislative changes.
  • Over the past year, FINTRAC also worked closely with reporting entities and their associations to finalize new guidance related to the Risk-Based Approach to combatting money laundering and terrorism financing. This guidance is intended for all reporting sectors and is structured to help reporting entities better understand the Risk-Based Approach and take inventory of their risks relating to products, services and delivery channels, clients and business relationships, geography and other relevant factors.
  • In 2014–15, FINTRAC and the Canada Revenue Agency successfully entered into a strategic partnership to support the shared reporting of electronic funds transfers to both organizations – helping the CRA combat international tax evasion and aggressive tax avoidance. In order to minimize the administrative burden imposed on Canadian businesses, a shared component was added to allow for data to be sent to the CRA through a Government of Canada Managed Secure File Transfer Service. The new shared reporting process enables businesses to file their international electronic funds transfer reports exactly as they had in the past, while meeting their legal obligations under the PCMLTFA and the Income Tax Act.
Priority: Pursue policy and legislative opportunities to strengthen the anti-money laundering and anti-terrorist financing (AML/ATF) regime.

Type:

  • Ongoing

Programs:

  • Financial Intelligence Program
  • Compliance Program
  • Internal Services

Summary of Progress:

  • The royal assent of Economic Action Plan 2014 Act, No. 1 introduced into legislation a number of amendments to the PCMLTFA including provisions which provide for FINTRAC to disclose financial intelligence on threats to the security of Canada to law enforcement and to the Canadian Border Services Agency (CBSA) when certain specific legal thresholds, in relation to either the police or CBSA, are met. Throughout the year, FINTRAC worked closely with the Department of Finance to begin implementing these amendments and support the development of regulations that will define some of the new provisions of the Act.
  • During the year, FINTRAC also continued to participate as a subject-matter expert in Canada's delegation to the Financial Action Task Force (FATF), led by the Department of Finance. In this capacity, FINTRAC played various leadership roles within the FATF Working Groups, namely as the Co-Chair of the Risk, Trends and Methods Group and the Co-Chair of the Americas Regional Review Group.
  • In 2014–15, FINTRAC actively supported the Department of Finance by participating in a number of regime-wide initiatives in preparation for the FATF mutual evaluation on Canada's AML/ATF regime. The FATF mutual evaluation will assess Canada's technical compliance against FATF recommendations and the effectiveness of the overall AML/ATF regime and is scheduled to take place during the 2015–16 fiscal year.
  • In addition, FINTRAC also remained very active in federal initiatives led by the Department of Public Safety and Emergency Preparedness, including continuing contributions to the National Anti-Drug Strategy and Canada's Counter-terrorism Strategy.
Priority: Leverage advancements in information technology as FINTRAC seeks to transform its business processes.

Type:

  • Previously committed to

Programs:

  • Financial Intelligence Program
  • Compliance Program
  • Internal Services

Summary of Progress:

  • In 2014–15, FINTRAC began the process of selecting technological solutions and initiating the renewal of its analytics system and business processes. The modernization of FINTRAC's analytics system is a significant priority for the Centre that requires a multi-year and multi-partner approach to complete. In the first year of the project, FINTRAC's focus was on completing the request for proposal and awarding a contract for the implementation of the solution. In 2015–16, the Centre will be positioned to begin the implementation phase of the new analytics system. This phase is expected to extend into the 2016–17 fiscal year.
  • During the year, FINTRAC continued working with Shared Services Canada to develop technical solutions for the migration of the Centre's data centre and its email services to government-wide solutions. The migration of its data centre, which includes the renewal of the platform, is expected to be completed in 2015–16.
  • The Centre also continued to implement the Government of Canada information management lifecycle to comply with the Treasury Board Secretariat Record Keeping Initiative. During the year, FINTRAC implemented an information management strategy to strengthen its information governance, finished the process of identifying all information records of business value and finalized disposition schedules for all of its information holdings.
  • FINTRAC also participated in other broad government-wide initiatives in the past year. In particular, the Centre launched several initiatives through its Greening Strategy to reduce dependency on paper, reduce costs and support environmental sustainability, as part of Canada's Federal Sustainable Development Strategy.
Priority: Strengthen the leadership capacity throughout the Centre by enhancing our ability to recruit, develop and retain talent that aligns with our objectives and deepens our expertise.

Type:

  • New

Programs:

  • Financial Intelligence Program
  • Compliance Program
  • Internal Services

Summary of Progress:

  • In 2014–15, FINTRAC continued to broaden its leadership development efforts, through activities such as the FINTRAC 101 learning series. This innovative approach to strengthening leadership capacity at all levels offered FINTRAC employees an opportunity to deepen their understanding of the Centre's business across a range of topics including strategic and tactical financial intelligence, digital currencies, compliance, mental health, and achieving value through outcome management.
  • In the spring, the Centre hosted its second annual Leadership Forum for senior management, and later launched a new three-part leadership series to strengthen collaboration and engage new and near managers in discussions about leadership. The sessions focused on collaboration and transformation, as well as topics of interest identified by participants, namely career development and employee engagement.
  • In order to ensure that management accountabilities and responsibilities are clear and adequate controls are in place, for example for the proper authorization of expenses, the Centre provided training to all employees with delegated human resources and/or financial management authorities. The training addressed all aspects of both delegation instruments, with a particular focus on legislative requirements and new policy instruments.
  • A streamlined and updated Policy on Hours of Work and Leave was developed to help ensure that associated provisions are understood by all staff and managed effectively, taking into consideration the business needs of the organization, the diverse needs of employees, and the principles of fairness and transparency.
  • Refinements made throughout the year to FINTRAC's tools and processes related to staffing, employee relations, classification and compensation have helped ensure that operational services remain efficient and responsive to the Centre's business needs.
  • The Centre's staffing plan exercise and year-end results report assisted with both forecasting resource needs and evaluating success. Broader indicators of people management results were provided in the annual FINTRAC demographics report, which outlined key workforce characteristics and metrics that inform the People Management Framework and decision-making across the Centre. The results of the 2014 Public Service Employee Survey were another key source of people management performance measures that will inform employee engagement activities and actions over the next three years.
Priority: Strengthen the Centre's approach to its security posture to ensure a high level of assurance that information, assets, and services are protected against compromise.

Type:

  • New

Programs:

  • Financial Intelligence Program
  • Compliance Program
  • Internal Services

Summary of Progress:

  • In view of the highly sensitive nature of the information that is handled by FINTRAC, the Centre continued to enhance its security posture in line with the Corporate Risk Profile and broader organizational priorities. In particular, the Director and the Departmental Security Officer jointly delivered focused mandatory security training to all FINTRAC personnel. The Policy on Security was updated and formerly acknowledged by all FINTRAC personnel.
  • As well, the Centre updated key documents that guide its Information Technology Security program and introduced its updated Departmental Security Plan that now outlines FINTRAC's organizational security priorities for the next three years.
  • FINTRAC also continued to strengthen its comprehensive security program through various initiatives intended to raise employee awareness in all areas of security, including the identification and protection of information holdings.
  • Finally, the Centre continued to implement measures in collaboration with Shared Services Canada and other key partners, to further strengthen its Emergency Management and Business Continuity programs.

Risk Analysis

Risk management is a key component of FINTRAC's decision-making, business planning, resource allocation, and operational management. The Centre's Corporate Risk Profile promotes risk management practices and integration of risk management activities within and among sectors and directorates, which is critical to FINTRAC's ability to respond to uncertainties in its environment and ensures that resources are effectively utilized.

In recent years, FINTRAC has sought to reduce its exposure to corporate risks associated with its operational environment. In general, those risks are now well identified, and the associated risk response activities have become integrated and stable. While the risk remains, the risk management strategies currently employed aim to reduce the probability of occurrence and provide a greater level of comfort with the remaining risk exposure.

FINTRAC's planning approach to the identification, assessment and management of risks supports the use of risk information on a systematic and continuous basis. This year, the scope for identifying corporate risks was widened, allowing for a broader assessment of the risks facing the organization. This corporate level view allows for oversight and collaboration in how common elements of risk are managed across the Centre.

Key Risks
Risk Risk Response Strategy Link to Program Alignment Architecture

Relationships – FINTRAC depends on relationships with external partners to advance its priorities and initiatives and maximize its value to Canadians.

Though FINTRAC has mechanisms in place to align its work with partners, partner organizations set their own priorities. In the case of police, law enforcement and national security partners, shifts in investigative priorities may impact the usefulness of FINTRAC disclosures. In other instances, partners' operational priorities may have an impact on FINTRAC's ability to implement its own priority initiatives. To ensure FINTRAC manages these relationship risks effectively, the Centre employs a number of controls including:

  • FINTRAC works with police, law enforcement and national security partners to build and maintain relationships, to ensure that priorities are understood and aligned, and to gather feedback.
  • FINTRAC maintains a trained complement of Compliance Officers having functional relationships with reporting entities, industry associations and other regulators and supervisors.
  • FINTRAC engages with domestic and international partners to support business strategies and processes (services / training / outreach).
  • Through participation in discussions with the Department of Finance and other AML/ATF regime partners; the Financial Action Task Force; and the Egmont Group, FINTRAC contributes to the exchange of knowledge and supports efforts to strengthen Canada's AML/ATF policy frameworks.
  • Compliance Program
  • Financial Intelligence Program
  • Internal Services

Security and Privacy – The protection of information that FINTRAC receives, analyzes and discloses is an integral part of the Centre's mandate.

FINTRAC employs a comprehensive suite of safeguards and controls to address security and privacy risk from both internal and external threats. Some of the most important of these include:

  • FINTRAC's Personnel Security Program ensures that all personnel and contractors are screened to the highest integrity levels.
  • Security policies and procedures are established to secure the Centre's physical environment and support the safeguarding of information. Access controls are implemented to secure FINTRAC's infrastructure.
  • A Privacy Management Framework is in place to ensure that privacy protection is reflected in all aspects of program operations.
  • Information Management and Security Programs provide direction and guidance on the capture, storage, protection, access to, classification, dissemination and eventual disposition of all information at FINTRAC.
  • Internal Services

Resource Management – FINTRAC's ability to successfully deliver its programs is directly linked to the adaptability, skills and engagement of its employees, and the tools and resources that are available to support their work.

FINTRAC places a strong focus on the effective management of both human and financial resources especially during periods of change and transformation. As a small organization, FINTRAC faces a number of challenges and limitations regarding its human resources capacity and its flexibility to cash manage funds. To ensure that FINTRAC is able to manage its resource management risks and ensure the effective stewardship of public resources, the Centre employs a range of controls including:

  • Budget and resource allocations to sectors/directorates/initiatives are established by the Centre's Executive Committee, representing the most senior level of executive management.
  • Guidance of the Chief Human Resources Officer and the Chief Financial Officer – as members of FINTRAC's Executive Committee and as leaders of robust frameworks of people and financial management.
  • HR planning strategies that include annual demographics analysis and staffing forecasts to anticipate and respond to capacity and change management issues.
  • Compliance Program
  • Financial Intelligence Program
  • Internal Services

Business Processes and Systems – FINTRAC's ability to deliver its mandate is dependent on the availability and use of key business processes and systems, many of which are currently undergoing transformation.

Until the completion of the Analytics Modernization Project, FINTRAC will continue to rely on aging infrastructure for the analysis and production of financial intelligence. To ensure the continued availability of its analytical systems and business processes to support ongoing activities, FINTRAC employs a number of safeguards and controls including:

  • Optimizing the use of existing systems and tools through training and awareness, planning manual solutions and contingencies to address system limitations and inefficiencies, and enhancing internal communications to ensure a common understanding of the needs as well as the information technology capacity within the organization.
  • Technical analysis to ensure the Centre has the tools and resources required to address day-to-day operational issues and to provide input into future business processes and systems.
  • Strategic planning and management of the ongoing Analytics Modernization Project to ensure delivery of a timely solution, including budgetary strategy, scope definition, process planning, and alignment, supported by a robust risk management strategy. Quality and timelines are provided through a senior-level committee which report on progress to FINTRAC's Executive Committee and the Director.
  • Leveraging Shared Services (SSC) Canada's support and expertise for the coordination of a range of initiatives, such as SSC Workload Migration, Analytics modernization implementation, Email Transformation Initiative and the broader Government of Canada Business Continuity maintenance and recovery strategy.
  • Compliance Program
  • Financial Intelligence Program
  • Internal Services

Actual Expenditures

Budgetary Financial Resources (dollars)

2014–15
Main Estimates

2014–15
Planned Spending

2014–15
Total Authorities
Available for Use

2014–15
Actual Spending
(authorities used)

Difference
(actual minus planned)

49,189,312

52,018,207

52,558,499

51,404,430

-613,777

Human Resources (Full-Time Equivalents [FTEs])
2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)

359

337

-22

Budgetary Performance Summary for Strategic Outcome and Programs (dollars)

Strategic Outcome(s), Program(s) and Internal Services

2014–15
Main Estimates

2014–15
Planned Spending

2015–16
Planned Spending

2016–17
Planned Spending

2014–15
Total Authorities Available for Use

2014–15
Actual Spending (authorities used)

2013–14
Actual Spending (authorities used)

2012–13
Actual Spending (authorities used)

Strategic Outcome: A Canadian financial system resistant to money laundering and terrorist financing

Financial Intelligence Program

20,905,458

22,107,738

22,395,256

21,546,038

22,659,674

20,873,133

21,668,241

22,673,503

Compliance Program

20,905,458

22,107,738

23,372,060

22,585,992

22,144,131

21,678,510

21,702,134

23,068,382

Subtotal

41,810,916

44,215,476

45,767,316

44,132,030

44,803,805

42,551,643

43,370,375

45,741,885

Internal Services Subtotal

7,378,396

7,802,731

7,768,187

7,426,109

7,754,694

8,852,787

8,333,808

8,251,686

Total

49,189,312

52,018,207

53,535,503

51,558,139

52,558,499

51,404,430

51,704,183

53,993,571

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2014-15 Actual Spending With the Whole-of-Government Framework (dollars)
Strategic Outcome Program Spending Area Government of Canada Outcome 2014–15
Actual Spending

A Canadian financial system resistant to money laundering and terrorist financing

1.1 Financial Intelligence Program

Social Affairs

A Safe and Secure Canada

20,873,133

1.2 Compliance Program

Social Affairs

A Safe and Secure Canada

21,678,510

 

Internal Services

 

 

8,852,787

Total Spending by Spending Area (dollars)
Spending Area Total Planned Spending Total Actual Spending

Economic affairs

 

 

Social affairs

44,215,476

42,551,643

International affairs

 

 

Government affairs

 

 

Departmental Spending Trend

Departmental Spending Trend. Details in text following the graph
View the text equivalent for Departmental Spending Trend
Departmental Spending Trend
Fiscal year Voted Statutory Sunset Programs - Anticipated
2012–13 48,880 5,114 700
2013–14 46,181 5,523 700
2014–15 46,418 4,987 700
2015–16 48,040 5,496 700
2016–17 46,030 5,528 700
2017–18 44,987 5,545 700

Actual Spending (2012–13 to 2014–15)

In 2012–13, the total resources available for spending were $56.2M, including $10.5M in Budget 2010 funding and $1.9M for the fit-up of FINTRAC's headquarters that was reprofiled from 2010–11. Actual spending for 2012–13 was $54.0M.

In 2013–14, the total resources available for spending were $53.3M including $10.0M in Budget 2010 funding. Actual spending for 2013–14 was $51.7M.

In 2014–15, the total resources available for spending were $52.6M, including $8.0M in Budget 2010 funding. The overall decrease in resources of $0.7M is mainly attributed to:

Actual spending for 2014–15 was $51.4M. The decrease in spending (of $0.3M) is reflective of the overall decrease in resources described above.

Planned Spending (2015–16 to 2016–17)

Planned spending increases in 2015–16 and 2016–17 due to new funding received for the implementation of legislative amendments. Planned spending in 2015–16 also includes a $2.2M estimate of the Centre's Operating Budget Carry-Forward (OBCF).

Since the tabling of FINTRAC's 2015–16 RPP, FINTRAC received approval for $3.8M in 2015–16 and $5.9M in 2016–17 for its analytics modernization project.

Expenditures by Vote

For information on FINTRAC's organizational voted and statutory expenditures, consult the Public Accounts of Canada 2015, which is available on the Public Works and Government Services Canada website.

Section II: Analysis of Programs by Strategic Outcome

Strategic Outcome: A Canadian financial system resistant to money laundering and terrorist financing

FINTRAC's role of assisting in the detection, prevention and deterrence of the laundering of criminal proceeds and the financing of terrorist activities is a vital component of Canada's anti-money laundering and anti-terrorist financing (AML/ATF) regime and supports the achievement of the Centre's strategic outcome of "A Canadian financial system resistant to money laundering and terrorist financing."

FINTRAC's strategic outcome is advanced through the following programs:

Program 1.1: Financial Intelligence Program

Description

FINTRAC's Financial Intelligence Program, mandated by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), is a component of the broader national security and anti-crime agenda. The program strives to disrupt the ability of criminals and terrorist groups that seek to abuse Canada's financial system and to reduce the profit incentive of crime. The main method of intervention used by the program is to analyze reported financial transactions and other information the Centre is authorized to receive and collect under the PCMLTFA to produce financial intelligence products including tactical case disclosures and strategic intelligence products that are relevant to the investigation, prosecution or understanding of money laundering and terrorist financing activities.

Budgetary Financial Resources (dollars)
2014–15
Main Estimates

2014–15
Planned Spending

2014–15
Total Authorities
Available for Use

2014–15
Actual Spending (authorities used)

2014–15
Difference
(actual minus planned)

20,905,458

22,107,738

22,659,674

20,873,133

-1,234,605

Human Resources (FTEs)
2014–15
Planned

2014–15
Actual

2014–15
Difference
(actual minus planned)

148

140

-8

Performance Results
Expected Results Performance Indicators Targets Actual Results

Disclosures of Financial intelligence make an important contribution to investigations of money laundering and terrorist financing.

Percentage of disclosure recipients indicating disclosure provided information that was helpful to the investigation.

70%

92%

 

Percentage of disclosure recipients indicating that information provided was actionable.

50%

94%

Strategic financial intelligence products align with the priorities of investigators, intelligence analysts, policy and decision-makers.

Percentage of primary recipients indicating increased awareness and understanding of ML/TF subject matter as a result of FINTRAC's strategic financial intelligence products.

75%

87%

Performance Analysis

FINTRAC delivers case disclosures and other financial intelligence that assists police, law enforcement and national security agencies in their investigations of suspected money laundering and terrorist activity financing, as well as supports the priorities of the AML/ATF and national security policy-making communities, domestic regime partners, and the broader security and intelligence community.

In 2014–15, FINTRAC made 1,260 disclosures of financial intelligence to its regime partners. Of these, 923 were associated solely with money laundering, 228 dealt solely with cases of terrorist activity financing and other threats to the security of Canada, and 109 had associations to all these areas.

During the year, 67% of case disclosures were initiated by voluntary information records (VIRs). VIRs are used by the Centre's investigative and intelligence partners to signal priority investigations where financial intelligence could make an important contribution. A total of 1,380 VIRs were received by the Centre during the 2014–15 fiscal year.

FINTRAC continues to receive positive feedback from police, law enforcement and national security partners. For investigators to be able to benefit from the financial intelligence produced by FINTRAC, it needs to be relevant, valuable and closely aligned to their priorities. To meet this objective, FINTRAC participates in ongoing discussions with the Canadian Association of Chiefs of Police and its committees dealing with organized crime as well as counter-terrorism and national security. Furthermore, FINTRAC is the only non-enforcement organization to sit on the Canadian Integrated Response to Organized Crime Committee. The Centre also exchanges personnel with partner organizations through assignments to develop capacity and expertise.

During the year, FINTRAC also produced strategic financial intelligence to provide a wide analytic perspective on existing and emerging issues of interest to the Canadian security and intelligence community, policy and decision-makers, international partners and allies, reporting entities, and other stakeholders. Strategic financial intelligence gives policy makers invaluable information to improve the prevention, detection, deterrence and disruption of money laundering and terrorist activity financing.

Over the past year, the Centre regularly engaged with domestic and international partners providing assessments, briefs and other strategic intelligence in support of: Government of Canada intelligence priority setting exercises; the development of AML/ATF policy and regulatory changes; criminal intelligence needs; the Government of Canada's listing process under the Anti-Terrorism Act; and the development of a national inherent risk assessment, led by the Department of Finance.

Understanding terrorist financing in the broader national security context has always been a priority for the Centre; however, the issue received additional prominence in 2014–15. During the year, FINTRAC worked closely with domestic and international agencies to develop a common understanding of the threat posed by the Islamic State of Iraq and the Levant (ISIL) and the foreign fighter issue to better inform Canada's ability to respond to it.

Throughout the year, FINTRAC provided a number of briefings to operational and policy audiences on the terrorist financing risks associated with ISIL. Some of these research and strategic intelligence products focused on ISIL's key financing strategies and assessing the financing available to ISIL through its territorial control.

In addition, FINTRAC completed over 100 outreach visits with its investigative partners during the year. The Centre also established a formal Training Working Group which is responsible for creating a structured and unique training curriculum to provide FINTRAC analysts with the necessary knowledge and skills to produce the Centre's financial intelligence disclosures.

During the year, members in the Training Working Group delivered presentations to audiences both internal and external to FINTRAC, including training modules for the Canadian Police College managed by the RCMP and the Intelligence Analyst Learning Program managed by the Privy Council Office. These interactive workshops clearly explained to participants, the role of a tactical financial analyst at FINTRAC and the value of financial intelligence in supporting investigations of suspected money laundering and terrorist activity financing.

Program 1.2: Compliance Program

Description

FINTRAC's Compliance Program is responsible for ensuring compliance with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations. The Compliance Program utilizes a risk based approach to deliver enforcement, relations and support activities that help ensure compliance with legislative and regulatory obligations that apply to individuals and entities operating in Canada's financial system.

Budgetary Financial Resources (dollars)
2014–15
Main Estimates
2014–15
Planned Spending
2014–15
Total Authorities
Available for Use
2014–15
Actual Spending (authorities used)
2014–15
Difference
(actual minus planned)

20,905,458

22,107,738

22,144,131

21,678,510

-429,228

Human Resources (FTEs)
2014–15
Planned

2014–15
Actual

2014–15
Difference
(actual minus planned)

158

144

-14

Performance Results
Expected Results Performance Indicators Targets Actual Results

Non-compliance among reporting entities is detected and addressed.

Percentage of cases where corrective actions taken are commensurate with the level of non-compliance detected.

100%

Percentage of cases where some level (limited, significant, or very significant) of non-compliance was detected: 90%.

Percentage of cases in which corrective action was established to address non-compliance: 100%

Entities have access to timely and accurate information.

Percentage of general inquiries answered within established timeframes.

90%

Percentage of general enquiries answered within 5 business days: 84.6%

Percentage of policy interpretation requests answered within 30 business days: 94.1%.

Performance Analysis

FINTRAC's Compliance Program promotes the concept of 'Compliance for Intelligence' in its operational and strategic decision-making. This concept recognizes that the overall effectiveness of Canada's AML/ATF regime, including the financial intelligence that is produced, is dependent upon reporting entities submitting high quality and timely financial transaction reports.

FINTRAC uses a range of compliance activities and tools to ensure that reporting entities meet their legal obligations, including compliance assessments such as examinations, follow-up examinations, compliance assessment reports, the monitoring of financial transaction reports, observation letters, and validation reviews. These activities are planned and undertaken commensurate with risk, with a larger proportion of the higher intensity assessment and enforcement activities allocated to medium and higher-risk reporting entity sectors, and the lower intensity awareness and assistance activities focused on lower-risk sectors.

As in past years, compliance examinations remain the primary instrument for assessing and enforcing compliance, and ensuring that the Centre receives quality and timely reports from reporting entities across Canada. Once FINTRAC identifies the level of intensity and coverage that is appropriate for each reporting entity sector, the Centre's Compliance Program applies a risk-based approach to determine the specific reporting entities that will be examined in any given year.

In 2014–15, FINTRAC conducted 629 compliance examinations. While this number is down from previous years, it reflects a shift in the Centre's examination strategy to conducting more complex and lengthy examinations of larger reporting entities in higher risk sectors in order to determine how effectively they were fulfilling their compliance obligations. In addition, the methodology of compliance examinations was modified to not only assess whether reporting entities had in place the required measures, but also to assess the effectiveness of those measures. This more rigorous approach to examinations marks an important evolution for FINTRAC's Compliance Program.

A good example of this approach is the shift to detailed effectiveness assessments of the frameworks implemented by these reporting entities and confirming that they are able to effectively identify and report suspicious transaction reports. The benefit of this approach is the increase in the quality and volume of suspicious transaction reports (STR). As a result of FINTRAC's efforts, and an increased commitment from reporting entities, STRs increased by 11 percent in 2014–15. As well, the comprehensiveness of the STRs has improved year-over-year, as observed by FINTRAC, as well as its law enforcement and national security partners.

FINTRAC also enhanced its compliance examination program to ensure that the most serious cases of non-compliance are dealt with on a priority basis. Follow-up cases are now selected based on levels of non-compliance observed in previous examinations and other risk factors available in FINTRAC's risk-assessment model, which ensures that FINTRAC manages risk, provides a treatment that is commensurate with the level of non-compliance observed, and uses its resources in the most effective manner to follow-up on entities with significant levels of non-compliance.

An Administrative Monetary Penalty (AMP) is the ultimate tool that FINTRAC can apply in a range of remedial actions for improving compliance with the PCMLTFA. If FINTRAC determines that an AMP should be issued, a Notice of Violation (NOV) is sent to the entity, outlining the violation(s) with the PCMLTFA, and setting out the penalty amount. FINTRAC issued 16 administrative monetary penalties in 2014–15. Since the AMP regulations came into force in December 2008, a total of 73 NOV's have been issued bringing the overall total to $5,117,710. Penalties have been imposed in the following sectors: credit union/caisses populaires, money services businesses, securities dealers, casinos and real estate.

Over the 2014–15 fiscal year, FINTRAC also completed 170 report monitoring cases, involving thousands of transaction reports, to address various reporting issues (such as quality or timing of reports). Most of the cases were addressed with the reporting entities through FINTRAC's reporting system while the rest were addressed through follow-up activities conducted by phone, email or letter.

The Centre conducted 96 reporting entity validation reviews whereby entities that appeared to be conducting business that could be covered under the PCMLTFA were contacted for confirmation of this activity. Reporting entity validation reviews can include online research, verbal communication with the entities or even on-site visits. Each of these assessments resulted in a final determination as to whether or not the entity was covered under the PCMLTFA.

During the year, FINTRAC's Compliance Program also responded to numerous enquiries on a broad range of issues, including reporting obligations, access to reporting systems, and the registration of money services businesses. Over the past fiscal year, FINTRAC responded to 7,460 general inquiries from reporting entities and their representatives from across the country.

The Centre also responds to requests from reporting entities for clarification or information, including answers to more complex questions, through policy interpretations. Although these interpretations do not apply broadly and are subject to change in the event of additional or different facts provided, they offer a complementary source of information from which entities can draw conclusions for their own specific business models. In 2014–15, the Centre issued 388 policy interpretations. As well, in December 2014, FINTRAC published on its website the nearly 1,200 policy interpretations that have been issued to date. The themes of the interpretations include: ascertaining identification, beneficial ownership, money services businesses registration, ongoing monitoring, politically exposed foreign persons, record keeping, and reporting.

Internal Services

Description

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are Management and Oversight Services, Communications Services, Legal Services, Human Resources Management Services, Financial Management Services, Information Management Services, Information Technology Services, Real Property Services, Materiel Services, Acquisition Services, and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not those provided to a specific program.

Budgetary Financial Resources (dollars)
2014–15
Main Estimates

2014–15
Planned Spending

2014–15
Total Authorities
Available for Use

2014–15
Actual Spending (authorities used)

2014–15
Difference
(actual minus planned)

7,378,396

7,802,731

7,754,694

8,852,787

1,050,056Footnote 1

Human Resources (FTEs)
2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)

53

53

0

Performance Analysis

FINTRAC's ability to deliver on its mandate ties directly to the adaptability, skills and dedication of its employees, and the tools and resources the Centre is able to provide them to perform their work. As an organization that always strives for excellence, FINTRAC places a strong focus on the effective management of its human, technological, security and financial resources.

FINTRAC takes a deliberate and strategic approach to engaging employees, particularly with respect to feedback on people management. During the year, employees were able to influence the people management agenda through face-to-face engagement activities and interactive features on the corporate intranet.

Blueprint 2020 was a call to action for all Public Service organizations and employees. As the Centre's 2011 Public Service Employee Survey action plan had already focussed on five organization-specific areas, its Blueprint 2020 activities emphasized horizontal and Public Service-wide commitments. This year, FINTRAC contributed to the horizontal initiatives outlined in Destination 2020 across all five priority areas: innovative practices and networking; processes and empowerment; people management; fundamentals of public service; and modern technology.

FINTRAC's staff also actively participated in the 2014 Public Service Employee Survey, registering a strong 96% participation rate. The 2014 results will form the basis of the Centre's next employee engagement activities with a horizontal working group leading the response and all employees invited to contribute to the discussion.

In the area of resource management, FINTRAC executed and fully implemented its management action plan in response to the Core Control Audit, administered by the Treasury Board Secretariat's Office of the Comptroller General. The objective of the audit was to ensure that FINTRAC's core controls over financial management result in compliance with key requirements contained in financial legislation, policies and directives.

In addition, in light of increasing business demands and new initiatives, including the modernization of the Centre's analytical system and business processes, certain functions and resources were realigned this year to enable FINTRAC to meet its priorities going forward. On a practical level, this meant that a number of employees were transferred between sectors. It is expected that organizational structures will be further refined in 2015–16 as the Centre adjusts to keep pace with new business demands.

Over the past year, FINTRAC also continued to enhance its security posture in line with its Corporate Risk Profile and broader organizational priorities. The main focus in 2014–15 was on updating the Centre's Policy on Security, updating the Departmental Security Plan and introducing focused mandatory security training for all personnel aimed at enhancing employee awareness in the areas of identification and protection of information holdings.

FINTRAC also continued to collaborate with Shared Services Canada to ensure the effectiveness of security safeguards.

Section III: Supplementary Information

Financial Statements Highlights

Condensed Statement of Operations (audited)
For the Year Ended March 31, 2015
(dollars)

Financial Information

2014–15
Planned
Results

2014–15
Actual

2013–14
Actual

Difference (2014–15 actual minus 2014–15 planned)

Difference (2014–15 actual minus 2013–14 actual)

Total expenses

60,792,395

59,620,200

60,572,672

-1,172,195

-952,472

Total revenues

-

-

-

-

-

Net cost of operations before government funding and transfers

60,792,395

59,620,200

60,572,672

-1,172,195

-952,472

Condensed Statement of Financial Position (audited)
As at March 31, 2015
(dollars)
Financial Information 2014–15 2013–14 Difference
(2014–15 minus
2013–14)

Total net liabilities

9,717,835

7,948,675

1,769,160

Total net financial assets

5,481,074

4,595,739

885,335

Departmental net debt

4,236,761

3,352,936

883,825

Total non-financial assets

7,137,549

7,291,834

-154,285

Departmental net financial position

2,900,788

3,938,898

-1,038,110

Financial Statements

The financial highlights presented within the Departmental Performance Report are intended to serve as a general overview of the Centre's financial position as presented in its Financial Statements.

Supplementary Information Tables

Tax Expenditures and Evaluations

The tax system can be used to achieve public policy objectives through the application of special measures such as low tax rates, exemptions, deductions, deferrals and credits. The Department of Finance Canada publishes cost estimates and projections for these measures annually in the Tax Expenditures and Evaluations publication. The tax measures presented in the Tax Expenditures and Evaluations publication are the responsibility of the Minister of Finance.

Section IV: Organizational Contact Information

Financial Transactions and Reports Analysis Centre of Canada

234 Laurier Avenue West
Ottawa, Ontario  K1P 1H7
Canada

Telephone: 1-866-346-8722

Fax: 613-943-7931

Website: http://www.fintrac-canafe.gc.ca/intro-eng.asp

Appendix: Definitions

appropriation (crédit):
Any authority of Parliament to pay money out of the Consolidated Revenue Fund.
budgetary expenditures (dépenses budgétaires):
Includes operating and capital expenditures; transfer payments to other levels of government, organizations or individuals; and payments to Crown corporations.
Departmental Performance Report (rapport ministériel sur le rendement):
Reports on an appropriated organization's actual accomplishments against the plans, priorities and expected results set out in the corresponding Report on Plans and Priorities. These reports are tabled in Parliament in the fall.
full-time equivalent (équivalent temps plein):
Is a measure of the extent to which an employee represents a full person-year charge against a departmental budget. Full-time equivalents are calculated as a ratio of assigned hours of work to scheduled hours of work. Scheduled hours of work are set out in collective agreements.
Government of Canada outcomes (résultats du gouvernement du Canada):
A set of 16 high-level objectives defined for the government as a whole, grouped in four spending areas: economic affairs, social affairs, international affairs and government affairs.
Management, Resources and Results Structure (Structure de la gestion, des ressources et des résultats):
A comprehensive framework that consists of an organization's inventory of programs, resources, results, performance indicators and governance information. Programs and results are depicted in their hierarchical relationship to each other and to the Strategic Outcome(s) to which they contribute. The Management, Resources and Results Structure is developed from the Program Alignment Architecture.
non-budgetary expenditures (dépenses non budgétaires):
Includes net outlays and receipts related to loans, investments and advances, which change the composition of the financial assets of the Government of Canada.
performance (rendement):
What an organization did with its resources to achieve its results, how well those results compare to what the organization intended to achieve and how well lessons learned have been identified.
performance indicator (indicateur de rendement):
A qualitative or quantitative means of measuring an output or outcome, with the intention of gauging the performance of an organization, program, policy or initiative respecting expected results.
performance reporting (production de rapports sur le rendement):
The process of communicating evidence-based performance information. Performance reporting supports decision making, accountability and transparency.
planned spending (dépenses prévues):
For Reports on Plans and Priorities (RPPs) and Departmental Performance Reports (DPRs), planned spending refers to those amounts that receive Treasury Board approval by February 1. Therefore, planned spending may include amounts incremental to planned expenditures presented in the Main Estimates.
A department is expected to be aware of the authorities that it has sought and received. The determination of planned spending is a departmental responsibility, and departments must be able to defend the expenditure and accrual numbers presented in their RPPs and DPRs.
plan (plan):
The articulation of strategic choices, which provides information on how an organization intends to achieve its priorities and associated results. Generally a plan will explain the logic behind the strategies chosen and tend to focus on actions that lead up to the expected result.
priorities (priorité):
Plans or projects that an organization has chosen to focus and report on during the planning period. Priorities represent the things that are most important or what must be done first to support the achievement of the desired Strategic Outcome(s).
program (programme):
A group of related resource inputs and activities that are managed to meet specific needs and to achieve intended results and that are treated as a budgetary unit.
Program Alignment Architecture (architecture d'alignement des programmes):
A structured inventory of an organization's programs depicting the hierarchical relationship between programs and the Strategic Outcome(s) to which they contribute.
Report on Plans and Priorities (rapport sur les plans et les priorités):
Provides information on the plans and expected performance of appropriated organizations over a three-year period. These reports are tabled in Parliament each spring.
result (résultat):
An external consequence attributed, in part, to an organization, policy, program or initiative. Results are not within the control of a single organization, policy, program or initiative; instead they are within the area of the organization's influence.
statutory expenditures (dépenses législatives):
Expenditures that Parliament has approved through legislation other than appropriation acts. The legislation sets out the purpose of the expenditures and the terms and conditions under which they may be made.
Strategic Outcome (résultat stratégique):
A long-term and enduring benefit to Canadians that is linked to the organization's mandate, vision and core functions.
sunset program (programme temporisé):
A time-limited program that does not have an ongoing funding and policy authority. When the program is set to expire, a decision must be made whether to continue the program. In the case of a renewal, the decision specifies the scope, funding level and duration.
target (cible):
A measurable performance or success level that an organization, program or initiative plans to achieve within a specified time period. Targets can be either quantitative or qualitative.
voted expenditures (dépenses votées):
Expenditures that Parliament approves annually through an Appropriation Act. The Vote wording becomes the governing conditions under which these expenditures may be made.
whole-of-government framework (cadre pangouvernemental):
Maps the financial contributions of federal organizations receiving appropriations by aligning their Programs to a set of 16 government-wide, high-level outcome areas, grouped under four spending areas.
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