Cracking Down on Money Laundering in Canada with Open-Source Intelligence and AI

In the Globe and Mail, Rita Trichur writes about Canada’s woeful attempts to crack down on its reputation for being a haven for money-laundering and criminal behaviour with the creation of a searchable, public database and registry designed to mitigate estimated billions in illicit financial activity:

Following years of international pressure, Ottawa is on the cusp of creating a corporate registry to unmask the owners of millions of shell companies. Those anonymous corporate entities, which can be used to access the banking system, are routinely exploited by criminals to launder illicit profits.

Bill C-42, which recently received royal assent, lays the foundation for a federal corporate database that will be searchable, free to use and accessible to the public. Its data will also be verified to prevent fraud, which has been a failing of corporate registries in other countries. (Fingers crossed that Ottawa’s database will actually be operational in 2024.)

A beneficial ownership registry will certainly help repair Canada’s reputation as a “secrecy jurisdiction” that facilitates “snow-washing” through shells. However, it is only one of many solutions needed to combat financial crime.

“A publicly accessible and searchable registry can deter billions of illicit funds from entering Canada through federal companies each year,” said Sasha Caldera, beneficial ownership campaign manager at Publish What You Pay Canada. “It’s a really good starting point.”

Money laundering poses a significant threat to the stability and integrity of financial systems worldwide but especially in Canada where we’ve developed a negative track record for our inability (willing or otherwise) to effectively tamp down on it. The Trudeau government is taking a step in the right direction with the recent passage of Bill C-42, aimed at establishing a federal corporate registry to unveil the owners of shell companies frequently exploited for illicit activities. While this registry is a commendable move, the integration of Open Source Intelligence (OSINT) and Artificial Intelligence (AI) technologies can further enhance Canada's efforts in combating money laundering and ensuring regulatory compliance.

The Power of OSINT:

In the context of financial crime, OSINT can be a game-changer. Utilizing OSINT tools, government agencies and financial institutions can track and analyze data from social media, news articles, public records, and other open sources to uncover connections, patterns, and potential risks associated with money laundering.

1. Identifying Beneficial Ownership: OSINT can be employed to cross-reference information from various public sources, helping to verify the accuracy of data submitted to the federal corporate registry. This ensures that the beneficial ownership information is comprehensive and reliable, addressing a crucial gap in Canada's anti-money laundering regime.

2. Monitoring Unusual Financial Activities: AI-driven OSINT tools can analyze vast amounts of data in real-time, enabling authorities to detect unusual financial activities that may indicate potential money laundering schemes. By continuously monitoring transactions and patterns, these tools can generate alerts for further investigation.

3. Deep Web/Dark Web Monitoring: IntelEdge’s unique capability to perform rapid, thorough examinations of typically ignored or under-searching aspects of the internet such as the deep web and dark web allows us to extract intelligence from sources that would typically be overlooked or ignored due to technical and human limitations. In the case of the deep web, documents that may provide illumination on activities or behaviour buried under piles of technical and obfuscated connections. And in the case of the dark web, explicitly criminal or grey market discussions and organising that can be examined for links relevant to AML/KYC questions.

The Role of AI in Enhancing Compliance Efforts:

Artificial Intelligence is a key player in revolutionizing the fight against financial crimes. Machine learning algorithms, in particular, can process and analyze data at a scale and speed that surpasses human capabilities.

1. Predictive Analytics for Risk Assessment: AI can assist financial institutions in conducting comprehensive risk assessments by analyzing historical data and identifying patterns that may indicate a higher risk of money laundering. This proactive approach allows for more targeted compliance efforts.

2. Automated Transaction Monitoring: Implementing AI-powered systems for transaction monitoring can significantly improve the efficiency of identifying suspicious activities. These systems can adapt and learn from new data, continually refining their ability to detect and flag transactions that deviate from normal behavior.

3. Enhancing Due Diligence Processes: AI can streamline due diligence processes by automating the analysis of large datasets. This not only accelerates the onboarding of new clients but also ensures a more thorough examination of their backgrounds, mitigating the risk of unwittingly facilitating money laundering.

As Canada takes steps towards a federal corporate registry to combat money laundering, the integration of OSINT and AI technologies stands as a potent strategy to fortify these efforts. By harnessing the power of publicly available information and cutting-edge algorithms, the Canadian government and financial institutions can stay one step ahead of financial criminals, ensuring a more secure and resilient financial landscape for the nation. As the fight against money laundering continues to evolve, the synergy between regulatory initiatives and technological advancements will prove indispensable in safeguarding the integrity of Canada's financial systems.

Find out today how IntelEdge can aid your organisation in clamping down on criminal activity.