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Anti-Money Laundering

Canada needs a national whistleblower framework

CPA Canada calls for comprehensive whistleblower reporting and protection framework

Canada has strengthened its fight against financial crime since 2017, through the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), and other legislation. But a much needed pan-Canadian national whistleblowing framework, which CPA Canada has long advocated for, is still lacking. 

There are currently “discrete pieces of legislation in Canada that provide whistleblowing frameworks and/or protections and/or rewards. There are individual pieces tackling specific issues. [But] none of it is really done very consistently,” says Michele Wood-Tweel, FCPA, FCA, vice-president of regulatory affairs for CPA Canada. 

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“In other words, if you look at specific legislation for whistleblowing in one province, you will find it includes rewards. If you go to the next province, you will find it doesn’t, and yet the issues are the same. The consistency, the holistic, comprehensive nature of what is being tried to achieve through this whistleblowing protection is also not there—it’s a patchwork quilt,” she adds. 

Wood-Tweel expressed concern that, in a worst-case scenario, a gap between federal and provincial law might result in a situation where a whistleblower is protected for their good faith efforts federally, but not provincially, so they end up being sued civilly.  

“And I think that’s where the danger lies for people to try and figure out what to do or say in any given circumstance,” she notes.  

On the positive side of the ledger, Canada has achieved much. Private business corporations registered under the Canada Business Corporations Act must file beneficial ownership information with Corporations Canada. This information is made available on a publicly accessible registry. 

“This is really going after what has been the opaqueness of private companies in Canada, making it difficult to basically deter or detect, and prosecute how private companies are being utilized for the wrong purposes,” says Wood-Tweel. 

A new Canadian Financial Crimes Agency has also been proposed. 

But more needs to be done. Using the Financial Crimes Agency as an example, if a whistleblowing framework were established, that could be very useful in assisting the Agency to detect, prevent and prosecute crimes, says Wood-Tweel.  

The potential for whistleblowing success is undervalued in Canada in terms of not recognizing that whistleblowers might be able to call out things that would otherwise remain hidden. CPA Canada and the International Federation of Accountants (IFAC), in a joint report Understanding Whistleblower Protection: Laws, Practices, Trends and Key Implementation Considerations, cited statistics from the Association of Fraud Examiners to note that “In practical terms, whistleblowers detect more fraud and other serious economic crimes than other detection methods, including audits and internal compliance.” 

But in order to do so, whistleblowers need to have the confidence and surety of knowing there is a system to protect and reward them, in considering what they might potentially be putting on the line for acting in the public interest. 

“It’s encouraging right now to see in Canada that there is at least some development in pockets, both by the federal government, and some of the provincial governments around whistleblowing as an avenue to improve what we consider to be efforts to address corruption, financial crime, and money laundering,” says Wood-Tweel. 

While there is no perfect system anywhere in the world, some jurisdictions are further ahead than Canada. The United Kingdom’s Public Interest Disclosure Act 1998 encompasses both the public and private sectors and the EU’s Directive on whistleblowing “has a breadth that is very interesting,” says Wood-Tweel. 

“We’ve seen the U.S. recently enhance its regime for anti-money laundering by introducing enhanced whistleblowing rewards. Australia has not stood still either. It looked at what it had in place for private sector organizations and enhanced its legal framework in 2019.” 

And so, like other jurisdictions, Canada must move forward with improvements to whistleblowing protection because the value is there. Furthermore, Canada has made commitments to its international partners to do so, says Wood-Tweel. 

“I understand the magnitude of this. I don’t think this is an easy task or an achievement to be taken lightly in terms of what it would take for Canada. But we’ve got to get beyond where we are today,” she stresses.