Pubdate: Tue, 14 Apr 1998 Source: Ottawa Citizen (Canada) Section: A1 / Front Contact: http://www.ottawacitizen.com/ Author: Jim Bronskill CANADA `EASY' ON DIRTY MONEY The United States has labelled Canada an ``easy target'' for drug traffickers and other criminals looking to launder dirty money. The U.S. State Department's annual report on the international drug trade says lax Canadian laws leave the door open for shady financial transactions intended to hide the source of ill-gotten funds. The department, which has previously singled out Canada, continues to take a hard line despite Liberal government promises to crack down on disreputable dealings. ``Canada still remains an easy target for drug-related and other types of money laundering,'' says the recently released International Narcotics Control Strategy Report. It lists Canada as a nation of ``primary'' concern -- the most severe rating -- along with several other places considered attractive for hiding cash, including Brazil, the Cayman Islands, Colombia, Italy and Japan. Money laundering usually involves a series of transactions to disguise the source of illegally gained assets and make the money appear legitimate. The State Department estimates the annual worldwide value of laundered funds at between $300 billion and $500 billion U.S. The practice fuels drug and arms dealers, and terrorists. Canada's vulnerability stems from its high volume of cross-border trade with the U.S., open financial system and ``fragmented'' approach to combatting shady money transfers, says the report. It criticizes Canada's lack of legislation to control the flow of money across borders or to require banks and other financial institutions to report suspicious transactions -- measures adopted by many other countries. The report acknowledges, however, that the Liberal government has promised to bring in such laws. Currency exchange houses, particularly near the U.S. border, are believed to move large amounts of drug money between the two countries, the report says. It suggests Canada establish a financial intelligence unit to collect and analyze information, then alert police. The State Department echoes concerns voiced by Canadian police, who also want more legal weapons to battle organized crime. The government took initial steps last year, bringing in rules governing casinos and giving police some additional powers. Solicitor General Andy Scott has promised new legislation that would make suspicious transaction reporting mandatory and allow authorities to monitor the flow of cash across borders. Mario Possamai of Forensic Investigative Associates in Toronto says the U.S. clampdown on money laundering may have attracted more criminals to unscrupulous Canadian operators. ``Our laws and restrictions are not as tough right now as theirs are, and they should be.'' Mr. Possamai added, however, that the challenge is to bring in controls without putting too onerous a burden on banks and other institutions.