Cash linked to crime, terrorism often handled improperly, audit finds: Knowledge Driven Revolution

A federal study has uncovered lax controls over the seizure of suspect cash that may be tied to crimes such as money laundering and terrorism.

The internal audit found border officials wrongly confiscated funds, failed to report seizures properly and did not always promptly deposit the money in the bank.

The Canada Border Services Agency report provides the first substantial look at how new cross-border currency controls are working.

Beginning in January 2003, the law required people entering or leaving Canada to tell a customs officer if they were carrying $10,000 or more.

The crackdown is considered a key means of tracking dirty money in the fight against organized crime, as well as the investigation of money laundering and terrorist financing.

The March 2006 audit, only recently made public, reveals that through March 2005 the border services agency made 3,100 seizures involving $88 million.

Undeclared funds can be seized and may be forfeited to the Crown. During the period covered, more than $29 million was forfeited, with another $1.3 million collected in penalties.

The report says that while the border agency was "generally in compliance" with policies and procedures, some weaknesses were discovered.

Canada Border Services Agency spokesman Derek Mellon said Monday the department had initiated improvements to address the shortcomings.

"We have implemented some measures, however it's pretty early in the process."

The audit found that in 10 cases border staff seized money that had been declared, contrary to the law, which says only undeclared currency or monetary instruments can be seized.

Many staff had trouble identifying monetary instruments that must be reported. The customs reference manual refers to an array of formats including stocks, bank drafts, traveller's cheques, debentures and money orders.

The majority of those interviewed "indicated that training in this area would be beneficial."

In dozens of instances in which money had been seized, there was a lack of documentation on file to show that proper notification to the relevant authorities had been made.

In addition, a significant number of staff said they had problems with the "accuracy, reliability and malfunctioning" of currency machines. This resulted in considerable time being spent counting by hand."

The audit also found cases in which:

-Seized funds were not deposited or forwarded to Public Works and Government Services, the appropriate agency, in a timely manner.

-Transfer of seized funds to police was "not being effectively controlled."

-Interdepartmental settlements of penalties and forfeitures from the border agency to Government Services were not being done expeditiously.

Under the law, officers must return seized currency upon payment of the relevant fine, unless the money is found to be the proceeds of crime or used to finance terrorism.

However, the auditors found the border agency could not produce documentation showing seized funds were indeed returned to the owner.

Mellon said the border agency had developed better information for front-line staff, added safeguards for the movement of seized cash, and hired more staff to handle reporting and settlements.

"We're continuing to implement some measures," he said.

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