2016–17 Departmental Results Report

For the period ending March 31, 2017


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


Table of Contents

Departmental Results Report (PDF version, 267 Kb)


Director's message

Gérald Cossette, Director

I am pleased to submit to Parliament and Canadians the Departmental Results Report for the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for 2016–17.

As Canada's financial intelligence unit, FINTRAC is uniquely positioned to uncover links between individuals and groups in Canada and abroad who engage in criminal activity and support terrorism.

Over the past year, we provided 2,015 disclosures of actionable financial intelligence to our partners for use in their investigations of money laundering, terrorist activity financing and threats to Canada's security. This represents a 120 percent increase in disclosures since 2012.

Our financial intelligence, which often contains reports reflecting thousands of transactions from across Canada and around the world, was used by Canada’s police, law enforcement and national security agencies last year in hundreds of investigations to confirm existing information, and to expand or define their investigations.

We also support the work of our government-wide partners and international allies through our strategic financial intelligence work on money laundering and terrorist activity financing methods and trends. In recent months, FINTRAC analysts have provided briefings at the United Nations on the laundering of the proceeds of human trafficking; anti-terrorism financing training in Senegal to 13 countries in North and West Africa; and technical assistance in relation to suspicious transaction reporting to a number of Caribbean financial intelligence units.

The actionable financial intelligence that we are able to generate begins with the efforts of Canadian businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). They are on the front lines of Canada's legitimate economy and are indispensable to our work and our ability to support our partners' money laundering and terrorism financing investigations.

Over the past year, our Compliance Program engaged in extensive activities to assess and enforce the compliance of reporting entities and to provide businesses with the tools and information they need to fulfill their obligations.

Ultimately, FINTRAC’s highly skilled and dedicated workforce is the foundation of our success. As we continue to modernize our operations, work methods and business processes, and with the direction of our new Strategic Plan, FINTRAC is achieving real and demonstrable results for Canadians and has set a course to realize its vision: To be the leader in the exploitation of financial intelligence.

Gérald Cossette
Director

Results at a glance

What funds were used?

$55,406,525

(FINTRAC’s actual spending for 2016–17)

Who was involved?

353

(FINTRAC’s actual FTEs for 2016–17)

Results Highlights

  • In 2016–17, FINTRAC made 2,015 disclosures of actionable financial intelligence to partners. Of these,
    • 1,366 related to money laundering;
    • 462 disclosures related to terrorism financing and threats to the security of Canada; and,
    • 187 disclosures related to money laundering, terrorism financing and threats to the security of Canada.
  • 1,953 voluntary information records were received from law enforcement and national security partners, as well as from the public.
  • 92% of disclosure recipients indicated that the FINTRAC disclosure provided information that was helpful to the investigation.
  • FINTRAC conducted 661 compliance examinations to assess the effectiveness of the compliance measures put in place by reporting entities.
  • Issued 278 policy interpretations to assist with compliance.
  • Responded to 5,719 enquiries from businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
  • Received 100% positive feedback from recipients on its strategic financial intelligence products.
  • Approved a new three-year Departmental Security Plan that details decisions for managing security risks and outlines strategies, goals, objectives, and priorities.
  • Launched the Centre’s first three-year Strategic Human Resources Plan, which pairs people management strategies with opportunities and challenges facing its operations.

For more information on the department’s plans, priorities and results achieved, see the "Results: what we achieved" section of this report.


Raison d’être, mandate and role: who we are and what we do

Raison d’être

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

FINTRAC acts at arm's length and is independent from the police services, 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.

Mandate and role

FINTRAC was established by, and operates within the ambit of, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations. The Centre is one of several domestic partners in Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) regime, which is led by the Department of Finance.

Vision

To be the leader in the exploitation of financial intelligence

Responsibilities

FINTRAC fulfills its mandate by engaging in the following activities:

In addition, FINTRAC is 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 also contributes to other multilateral fora such as the Financial Action Task Force (FATF), the Asia-Pacific Group on Money Laundering (APG) and the Caribbean Financial Action Task Force (CFATF), participating in international policy making and the provision of technical assistance to other FIUs.

FINTRAC is headquartered in Ottawa, with regional offices located in Montréal, Toronto, and Vancouver.

For more general information about FINTRAC, see the “Supplementary information” section of this report.

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 the management, disclosure and destruction 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 FINTRAC can only make a financial intelligence disclosure to prescribed police, law enforcement, national security agencies, and provincial securities regulators. Furthermore, the PCMLTFA clearly defines what information shall be disclosed and sets out specific thresholds that must be met before the Centre is able to disclose it. Any other disclosure or improper use 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.

Over the past year, as part of its outreach efforts, FINTRAC provided guidance and training to reporting entities on the importance of submitting information in accordance with the requirements in the legislation and regulations.

In 2016–17, the Office of the Privacy Commissioner undertook its mandated bi-annual review of the measures taken by FINTRAC to protect the personal information it receives or collects. While the audit report had not been completed by the end of the fiscal year, FINTRAC is committed to using the audit’s results to further strengthen its comprehensive approach to safeguarding the personal information it holds.

Operating context and key risks

Operating context

The world’s financial systems are rapidly evolving. With the advent of agile methodologies, big data, predictive analytics, distributed systems, and new payment platforms and digital currencies, the financial services industry is seeing an unprecedented level of digital disruption. In particular, FinTech – the name given to start-ups and more established companies using technology to make financial services more effective and efficient – is expanding rapidly, blurring the industry’s boundaries and forcing both banking incumbents and regulators to address issues of changing payment systems and mobility.

With the increasing speed of change and the application of technology challenging traditional concepts of privacy, data security and ownership there is an increasing risk that organized crime groups, cyber criminals, human traffickers and terrorist organizations, among others, may be growing more sophisticated, seeking to manipulate any vulnerability in the system to their advantage.

Similarly, terrorism remains a substantial threat both at the international and national level, marked by political and civil unrest in several regions. The recruitment and financing activities of foreign terrorist fighters, and effective radicalization tactics that incite domestic acts of terrorism continue to complicate the work of FINTRAC and its partners at home and abroad.

Amendments to the PCMLTFA in 2014 and 2015 enhanced FINTRAC’s ability to disclose financial intelligence to regime partners on threats to the security of Canada and provided the Centre with the ability to disclose information to provincial securities regulators. With the implementation of Budget 2014 and 2015, the Government also announced that new regulations would be developed, including in relation to foreign money services businesses, prepaid access products and entities dealing in virtual currencies.

FINTRAC is in the process of transforming and aligning its operations and business processes to increase its efficiency and effectiveness. The modernization of the Centre’s analytics system is a key priority of FINTRAC’s transformation agenda and its impact will be sweeping and long-lasting: it will bring significant efficiency through the automation of manual work; allow for the full use of the Centre’s knowledge holdings; and provide additional tools to safely receive, protect, and dispose of analytical data.

Key risks

As Canada’s financial intelligence unit and a partner in Canada’s AML/ATF regime, FINTRAC operates in a dynamic, constantly changing environment. In seeking to be proactive in identifying risks and opportunities, FINTRAC must anticipate and assess internal and external risk factors that can affect the design and delivery of its programs and the achievement of its strategic outcome.

In recent years, FINTRAC has broadened its understanding of the corporate risks associated with its operational environment. In general, these risks are well identified and the associated risk response activities are integrated and stable. FINTRAC’s current risk management strategies aim to reduce the probability of occurrence and provide a greater level of comfort with the remaining risk exposure.

FINTRAC’s approach to the identification, assessment and management of risks supports the use of risk information on a systematic and continuous basis and allows for oversight and collaboration in managing common risk elements.

Key Risks
Risk Risk response strategy Link to the department’s Programs Link to mandate letter commitments or government-wide and departmental priorities

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 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; and
  • HR planning strategies that include a three-year strategic plan, as well as annual demographics analysis and staffing forecasts to anticipate and respond to capacity and change management issues.
  • Financial Intelligence Program
  • Compliance Program
  • Internal Services

FINTRAC priorities:

  • Grow our talent
  • Renew our workforce
  • Facilitate partner collaboration to achieve common objectives

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 existing, aging infrastructure for the analysis and production of financial intelligence. As FINTRAC’s infrastructure is now an asset of Shared Services Canada (SSC), FINTRAC works closely with SSC to ensure uninterrupted availability of its analytical systems and business processes during the transformation period. To address ongoing risks, FINTRAC employs a number of important safeguards and controls, including:

  • Optimizing the use of existing systems and tools through training and awareness, and enhanced internal communications;
  • Conducting 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;
  • Focusing on strategic planning and management of the ongoing Analytics Modernization Project to ensure delivery of a timely solution; and
  • Leveraging SSC’s support and expertise on information technology related initiatives including Analytics modernization implementation and the broader Government of Canada Business Continuity maintenance and recovery strategy.
  • Financial Intelligence Program
  • Compliance Program
  • Internal Services

FINTRAC priority:

  • Modernize analysis and systems to support an ever-changing environment

Budget 2016:

  • Investing in government information technology

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

FINTRAC has mechanisms in place to align its work with the priorities of its partners; however partner organizations may alter their priorities at any time. In the case of 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 develops and maintains functional working relationships with key stakeholders including reporting entities, industry associations, regulators and supervisors and regularly provides training through such vehicles as speaking engagements, sector focused forums, written guidance and other outreach;
  • FINTRAC’s comprehensive communications strategy includes collaborating with the Centre’s key police and law enforcement partners to publicize their announced charges, arrests and convictions in investigations where FINTRAC’s contribution was recognized; and
  • Through its contribution to policy development and operational discussions with the Department of Finance and other AML/ATF regime partners, the Financial Action Task Force, and the Egmont Group, FINTRAC engages in the exchange of knowledge and works to strengthen Canada’s AML/ATF policy frameworks.
  • Financial Intelligence Program
  • Compliance Program
  • Internal Services

FINTRAC priorities:

  • Achieve compliance through collaboration and increased transparency
  • Harness the power of financial intelligence
  • Facilitate partner collaboration to achieve common objectives

Speech from the Throne (2015):

  • Security and Opportunity

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 appropriate levels;
  • Security policies and procedures, and mandatory training and awareness activities are established to secure the Centre’s information and systems. Access controls are also implemented to secure FINTRAC’s facilities and 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; and
  • Review of security safeguards to ensure they are performing as expected.
  • Internal Services

FINTRAC priorities:

  • Modernize analysis and systems to support an ever-changing environment
  • Facilitate partner collaboration to achieve common objectives

Speech from the Throne (2015):

  • Security and Opportunity

Budget 2016:

  • Strengthening the security of Government of Canada networks and cyber systems

Results: what we achieved

Programs

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

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 under the PCMLTFA to produce financial intelligence products including tactical case disclosures that are relevant to the investigation or prosecution of money laundering and terrorist activity financing, and strategic intelligence products that broaden understanding in respect to the nature, scope and threat posed by money laundering and terrorism financing.

Program performance analysis

FINTRAC's case disclosures play an important role in helping to combat money laundering, terrorist activity financing and other threats to the security of Canada. In 2016–17, FINTRAC provided 2,015 disclosures of actionable financial intelligence to its regime partners. Of these, 1,366 were associated solely with money laundering, 462 dealt with cases of terrorist activity financing and other threats to the security of Canada, and 187 had associations with all three areas.

Throughout the year, the Centre's case disclosures contributed to a significant number of investigations at the federal, provincial and municipal levels across the country. Canadian police forces — particularly the Royal Canadian Mounted Police — continue to be the main recipients of FINTRAC's actionable financial intelligence.

FINTRAC maintains very strong and productive working relationships with its police, law enforcement and national security partners to ensure that its financial intelligence is relevant, valuable and closely aligned to their priorities. The Centre continually seeks feedback on its disclosures from partners at the municipal, provincial and federal levels. In 2016–17, FINTRAC received 1,112 disclosure feedback forms with the level of positive feedback from partners continuing to exceed expectations.

During the year, FINTRAC also conducted more than 190 outreach visits and presentations to partner organizations both domestically and internationally, including ongoing presentations at the Canadian Police College as well as the Intelligence Analyst Learning Program run by the Privy Council Office. Outreach presentations provide the opportunity for FINTRAC to demonstrate the value of financial intelligence in assisting law enforcement investigations. Municipal, provincial and federal law enforcement agencies as well as several foreign Financial Intelligence Unit partners have provided positive feedback on the value and benefit of FINTRAC outreach presentations.

In addition to case disclosures, FINTRAC also produces 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.

In 2016–17, an area of focus for FINTRAC’s strategic intelligence was on Daesh’s financing strategies and the assessment of the financing available to the terrorist group through its territorial control. In December 2016, FINTRAC published an Operational Alert on the identification of higher risk currency exchange houses in Daesh-accessible territory in Iraq. The report provided additional guidance to Canadian businesses dealing with financial transactions emanating from, or destined to, jurisdictions under Daesh’s control and its surrounding areas.

Lastly, with the recognition that the emergence of innovative financial technologies (FinTech) is reshaping the financial services sector in Canada, FINTRAC created a dedicated strategic analysis team to enhance the Centre’s capacity to anticipate and address the future challenges as well as the opportunities that FinTech presents to the AML/ATF regime.

Performance results
Expected results Performance indicators Target Date to achieve target Actual results
2014–15 2015–16 2016–17
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% 2016–17 92% 92% 92%
Percentage of disclosure recipients indicating that information provided was actionable. 50% 2016–17 94% 93% 93%
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% 2016–17 87% N/AFootnote 1 100%
Budgetary financial resources (dollars)
2016–17
Main Estimates
2016–17
Planned spending
2016–17
Total authorities available for use
2016–17
Actual spending (authorities used)
2016–17
Difference (actual minus planned)
27,127,113 28,387,444 28,211,047 27,084,324 -1,303,120
Human resources (full-time equivalents)
2016–17
Planned full-time equivalents
2016–17
Actual full-time equivalents
2016–17
Difference (actual minus planned)
150 152 2

PROGRAM 1.2: COMPLIANCE PROGRAM

Description

FINTRAC’s Compliance Program is responsible for ensuring compliance with Part 1 and Part 1.1 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, and 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.

Program 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 actionable financial intelligence that is produced, is dependent upon reporting entities submitting high quality and timely financial transaction reports.

The Centre uses a range of compliance and enforcement activities and tools to ensure that all reporting entities fulfill their PCMLTFA obligations. This includes examinations and follow-up examinations, the issuance of compliance assessment reports, the monitoring of financial transaction reports, observation letters and validation reviews, as well as other awareness and assistance activities. These activities are planned and undertaken based on risk, with a larger proportion of the Centre's higher intensity assessments and enforcement activities allocated to medium and higher-risk reporting entity sectors, and lower intensity awareness and assistance activities assigned to lower-risk sectors.

In 2016–17, FINTRAC conducted 661 compliance examinations across all sectors, with significant effort dedicated to working with the real estate sector and the British Columbia Notaries in particular. As a result of these efforts, the Centre has noted an increase in suspicious transaction reporting by BC Notaries (120% increase when compared to 2015–16) and the real estate sector (181% increase when compared to 2015–16). Because suspicious transaction reports have a narrative component, these reports have the potential to provide tremendous intelligence value to the Centre.

Throughout 2016–17, FINTRAC's Compliance Program dedicated significant effort to conducting over 50 outreach engagements, including over 20 consultation meetings related to the guidance project. The objective of the guidance project is to update FINTRAC guidelines so that they are easier to navigate by sector and are clear, concise and easy to understand. Also, the project will ensure that the language is consistent with FINTRAC’s compliance and enforcement strategy so it is easier for reporting entities to understand how their obligations will be assessed.

In addition to its examinations, guidance update, and outreach activities, the Centre responded to enquiries from reporting entities and other stakeholders 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 5,719 enquiries from reporting entities from across the country.

The Centre also responds to requests from reporting entities and other stakeholders for clarification, including the analysis of complex business models and emerging technology applications, through policy interpretations that are based on the specific situations and facts provided by the requestor. In 2016–17, the Centre issued 278 policy interpretations to Regional Compliance Officers and Reporting Entities. The complexity of the policy interpretation requests and level of external consultations required was much higher than previous years. As a result, the response time, which was set to 30 days when it was first established in 2012, is no longer practical and FINTRAC will be reviewing its service standards moving forward.

Performance results
Expected results Performance indicators Target Date to achieve target Actual results
2014–15 2015–16 2016–17
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% 2016–17

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%

Percentage of cases where some level (limited, significant, or very significant) of non-compliance was detected: 96%

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

Percentage of cases where some level (limited, significant, or very significant) of non-compliance was detected: 94%

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% 2016–17

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

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

Percentage of general enquiries answered within 5 business days: 85%

Percentage of policy interpretation requests answered within 30 business days: 88%

Percentage of general enquiries answered within 5 business days: 85%

Percentage of policy interpretation requests answered within 30 business days: 65%

Budgetary financial resources (dollars)
2016–17
Main Estimates
2016–17
Planned spending
2016–17
Total authorities available for use
2016–17
Actual spending (authorities used)
2016–17
Difference (actual minus planned)
22,259,185 23,519,516 22,783,119 20,353,044 -3,166,472
Human resources (full-time equivalents)
2016–17
Planned full-time equivalents
2016–17
Actual full-time equivalents
2016–17
Difference (actual minus planned)
161 150 -11

Internal Services

Description

Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories 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; and Acquisition Services.

Program performance analysis

FINTRAC's Internal Services support the Centre's Financial Intelligence and Compliance programs. The overall objective of the program is to ensure that FINTRAC has the proper capacity, processes and systems to allow its workforce to focus on and perform well in meeting its operational objectives.

Building on the solid foundation of its People Management Framework and Strategic Plan, FINTRAC launched its three-year Strategic Human Resources (HR) Plan in 2016–17. Developed collaboratively, the Strategic HR Plan brought together the Centre’s priorities and key initiatives in a single story, taking a business-first approach that paired people management strategies with the opportunities and challenges facing FINTRAC’s operations. The Strategic HR Plan was an important touchstone for the subsequent development of FINTRAC’s business plan and performance measurement scorecard, and was shared with all public servants as part of the Centre’s Public Service Renewal report.

In addition, FINTRAC continued to establish a legacy of positive change through its Public Service Employee Survey (PSES) Action Plan. Through the Strategic HR Plan and PSES Action Plan, FINTRAC pursued its new strategic direction, renewing its workforce, growing talent from within, capitalizing on the richness of diversity, nurturing a culture of inclusiveness and respect, and cultivating excellence through collaboration and engagement. This integrated approach to people management was essential to FINTRAC’s ability to deliver meaningful results to Canadians as a small separate agency in 2016–17.

During the year, FINTRAC assisted the Department of Finance in preparing for the Financial Action Task Force’s (FATF) discussion of Canada’s mutual evaluation report (MER), which was published on September 15, 2016. The MER identified areas of strength and weakness in Canada’s AML/ATF regime’s technical compliance and effectiveness and recommended steps to improve the regime as a whole. In the report, FINTRAC was recognized for its substantial level of effectiveness in AML/ATF supervision and for providing “a significant amount of financial intelligence to law enforcement agencies”. As part of the FATF MER follow-up process, FINTRAC will continue to work closely with the Department of Finance to prepare, and report on, the actions required to demonstrate progress in addressing its AML/ATF deficiencies, including the implementation of legislative, regulatory and operational measures. Canada’s first follow-up report is scheduled to be provided as an information piece to the FATF in the fall of 2017.

Moreover, FINTRAC and the Department of Finance continued to consult reporting industry sectors in regards to regulatory amendments, particularly those amendments not yet in force, to ensure a smooth and successful implementation of the provisions. In addition, in preparation of the upcoming five-year (2017–18) Parliamentary Review of the PCMLTFA, FINTRAC began to explore and identify potential areas of improvement for Canada’s AML/ATF regime and developed policy proposals that are forward-looking, adaptable and resilient for submission to the Department of Finance.

In 2016–17, FINTRAC continued to make steady progress in the implementation of the multi-year plan for the modernization of its analytics system, including the formation of a Technical Working Group to proactively address technical risks and the preparation of data for ingestion. Schedule changes were necessary due to a number of factors, most notably the identification of additional complexities in the historical data ingestion process, which has resulted in a reset of timelines of some planned deployments. While the project is still on schedule for full completion by fiscal year 2018–19, the implementation phase of the project will need to continue into the spring of 2018.

Additionally, in collaboration Shared Services Canada, FINTRAC developed a new IM/IT Strategy and Roadmap for 2017–20 to define the vision and path to continuous improvement and growth of services provided to internal and external partners.

Lastly, over the past year, FINTRAC continued to enhance its security posture by approving a new three-year Departmental Security Plan that details FINTRAC’s approach for managing security risks and outlines the Centre’s strategies, objectives, priorities and timelines for improving departmental security and supporting its implementation.

Budgetary financial resources (dollars)
2016–17
Main Estimates
2016–17
Planned spending
2016–17
Total authorities available for use
2016–17
Actual spending (authorities used)
2016–17
Difference (actual minus planned)
7,310,764 7,755,587 7,652,785 7,969,157 213,570
Human resources (full-time equivalents)
2016–17
Planned full-time equivalents
2016–17
Actual full-time equivalents
2016–17
Difference (actual minus planned)
53 51 -2

Analysis of trends in spending and human resources

Actual expenditures

Departmental spending trend graph

Departmental spending trend. Details in text following the graph:
View the text equivalent for Departmental Spending Trend
Departmental Spending Trend
Fiscal year Total Voted Statutory Sunset Programs - Anticipated
2014–15 51,404 46,418 4,986 0
2015–16 54,952 49,893 5,059 0
2016–17 55,407 50,444 4,963 0
2017–18 53,778 48,495 5,283 0
2018–19 50,611 45,313 5,298 0
2019–20 48,108 43,024 5,084 0

Note: Totals may not add due to rounding

Actual spending (2014–15 to 2016–17)

In 2014–15, the total resources available for spending were $52.6M. Actual spending was $51.4M.

In 2015–16, the total resources available for spending were $56.3M. The overall increase of $3.7M is mainly attributed to:

Actual spending for 2015–16 was $55.0M. The increase in spending ($3.6M) is reflective of the overall increase in resources described above.

In 2016–17, the total resources available for spending were $58.6M. The overall increase of $2.3M is mainly attributed to:

Actual spending in 2016–17 was $55.4M.

Planned spending (2017–18 to 2018–19)

Planned spending decreases in 2017–18 are due primarily to the funding profiles for the implementation of legislative amendments and the modernization of FINTRAC’s analytical system. Planned spending in 2017–18 also includes a $2.6M estimate of the Centre’s Operating Budget Carry-Forward (OBCF).

Planned spending is lower in 2018–19 due to the funding profiles for the implementation of legislative amendments and the modernization of FINTRAC’s analytical system. Additionally, 2018–19 planned spending does not include an estimate of the Centre’s OBCF.

Budgetary performance summary for Programs and Internal Services (dollars)
Strategic Outcome, Programs and Internal Services 2016–17
Main Estimates
2016–17
Planned Spending
2017–18
Planned Spending
2018–19
Planned Spending
2016–17
Total Authorities Available for Use
2016–17
Actual Spending (authorities used)
2015–16
Actual Spending (authorities used)
2014–15
Actual Spending (authorities used)
Strategic Outcome: A Canadian financial system resistant to money laundering and terrorist financing
Financial Intelligence Program 27,127,113 28,387,444 24,123,606 22,301,596 28,211,047 27,084,324 24,973,253 20,873,133
Compliance Program 22,259,185 23,519,516 22,063,142 21,101,856 22,783,119 20,353,044 22,081,112 21,678,510
Subtotal 49,386,298 51,906,960 46,186,748 43,403,452 50,994,166 47,437,368 47,054,365 42,551,643
Internal Services 7,310,764 7,755,587 7,590,930 7,207,480 7,652,785 7,969,157 7,898,026 8,852,787
Total 56,697,062 59,662,547 53,777,678 50,610,932 58,646,951 55,406,525 54,952,391 51,404,430

Actual human resources

Human resources summary for Programs and Internal Services
(full-time equivalents)
Programs and Internal Services 2014–15 Actual 2015–16 Actual 2016–17 Planned 2016–17 Actual 2017–18 Planned 2018–19 Planned
Financial Intelligence Program
140
136
150
152
157
157
Compliance
144
150
161
150
151
152
Subtotal
284
286
311
302
308
309
Internal Services
53
53
53
51
51
51
Total
337
339
364
353
359
360

Actual FTEs remained consistent in fiscal years 2014–15 and 2015–16.

Actual FTEs increased in 2016–17 primarily due to hiring related to funding that was received to implement legislative amendments and to facilitate disclosures to provincial securities regulators, as well as the materialization of planned staffing.

Planned FTEs in 2017–18 to 2018–19 reflect anticipated hiring related to funding that was received to implement legislative amendments and to facilitate disclosures to provincial securities regulators.

Estimates by vote

For information on the FINTRAC’s organizational voted and statutory expenditures, consult the Public Accounts of Canada 2017.

Alignment of spending with the whole-of-government framework

Alignment of 2016–17 Actual Spending With the Whole-of-Government Framework (dollars)
Program Spending Area Government of Canada activity 2016–17
Actual Spending
1.1 Financial Intelligence Program Social Affairs A Safe and Secure Canada 27,084,324
1.2 Compliance Program Social Affairs A Safe and Secure Canada 20,353,044
Total spending by spending area (dollars)
Spending area Total planned spending Total actual spending
Economic affairs - -
Social affairs 51,906,960 47,437,368
International affairs - -
Government affairs - -

Financial statements and financial statements highlights

Financial statements

FINTRAC’s financial statements for the year ended March 31, 2017, are available on the departmental website.

Financial statements highlights

Condensed Statement of Operations (audited) for the year ended March 31, 2017 (dollars)
Financial Information 2016–17
Planned Results
2016–17
Actual
2015–16
Actual
Difference (2016–17 actual minus 2016–17 planned) Difference (2016–17 actual minus 2015–16 actual)
Total expenses 55,263,140 52,103,530 56,631,980 -3,159,610 -4,528,450
Total revenues - 46 - 46 46
Net cost of operations before government funding and transfers 55,263,140 52,103,484 56,631,980 -3,159,656 -4,528,496

In 2016–17, total expenses of $52.1M were $4.5M less than in 2015–16, a decrease of 8%. The decrease is largely attributed to a difference of $2.0M in licensing costs paid to Shared Services Canada in 2015–16 related to the AMO project. The remaining difference is attributed to reduced salary, amortization and professional services expenses.

Salaries and employee benefits, in the amount of $40.3M, represented the largest portion of FINTRAC’s expenses at 77% of the total. Other operating expenses accounted for the remaining 23% ($11.8M) of FINTRAC’s expenses.

Condensed Statement of Financial Position (audited) as at March 31, 2017 (dollars)
Financial Information 2016–17 2015–16 Difference (2016–17 actual minus 2015–16 actual)
Total net liabilities 8,406,096 9,720,377 -1,314,281
Total net financial assets 4,919,568 5,578,579 -659,011
Departmental net debt 3,486,528 4,141,798 -655,270
Total non-financial assets 14,579,120 8,405,954 6,713,166
Departmental net financial position 11,092,592 4,264,156 6,828,436

The departmental net financial position increased in 2016–17 by $6.8M compared to 2015–16. This increase is attributed to the change in tangible capital assets which is primarily comprised of 2016–17 analytics modernization costs for assets under construction of $6.8M.

Supplementary information

Corporate information

Organizational profile

Appropriate 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. (PCMLTFA)

Year of commencement: 2000

Reporting framework

FINTRAC’s Strategic Outcome and Program Alignment Architecture (PAA) of record for 2016–17 are shown below:

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

1.1 Program: Financial Intelligence Program
1.2 Program: Compliance Program

Internal Services

Supplementary information tables

Federal tax expenditures

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 each year in the Report on Federal Tax Expenditures. This report also provides detailed background information on tax expenditures, including descriptions, objectives, historical information and references to related federal spending programs. The tax measures presented in this report are the responsibility of the Minister of Finance.

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)
Operating and capital expenditures; transfer payments to other levels of government, organizations or individuals; and payments to Crown corporations.
Core Responsibility (responsabilité essentielle)
An enduring function or role performed by a department. The intentions of the department with respect to a Core Responsibility are reflected in one or more related Departmental Results that the department seeks to contribute to or influence.
Departmental Plan (Plan ministériel)
Provides information on the plans and expected performance of appropriated departments over a three year period. Departmental Plans are tabled in Parliament each spring.
Departmental Result (résultat ministériel)
A Departmental Result represents the change or changes that the department seeks to influence. A Departmental Result is often outside departments’ immediate control, but it should be influenced by program-level outcomes.
Departmental Result Indicator (indicateur de résultat ministériel)
A factor or variable that provides a valid and reliable means to measure or describe progress on a Departmental Result.
Departmental Results Framework (cadre ministériel des résultats)
Consists of the department’s Core Responsibilities, Departmental Results and Departmental Result Indicators.
Departmental Results Report (Rapport sur les résultats ministériels)
Provides information on the actual accomplishments against the plans, priorities and expected results set out in the corresponding Departmental Plan.
Evaluation (évaluation)
In the Government of Canada, the systematic and neutral collection and analysis of evidence to judge merit, worth or value. Evaluation informs decision making, improvements, innovation and accountability. Evaluations typically focus on programs, policies and priorities and examine questions related to relevance, effectiveness and efficiency. Depending on user needs, however, evaluations can also examine other units, themes and issues, including alternatives to existing interventions. Evaluations generally employ social science research methods.
full-time equivalent (équivalent temps plein)
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-wide priorities (priorités pangouvernementales)
For the purpose of the 2017–18 Departmental Plan, government-wide priorities refers to those high-level themes outlining the government’s agenda in the 2015 Speech from the Throne, namely: Growth for the Middle Class; Open and Transparent Government; A Clean Environment and a Strong Economy; Diversity is Canada's Strength; and Security and Opportunity.
horizontal initiatives (initiative horizontale)
A horizontal initiative is one in which two or more federal organizations, through an approved funding agreement, work toward achieving clearly defined shared outcomes, and which has been designated (e.g. by Cabinet, a central agency, etc.) as a horizontal initiative for managing and reporting purposes.
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)
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 Departmental Plans and Departmental Results Reports, 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 Departmental Plans and Departmental Results Reports.

plans (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.
results (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.
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