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The Morning Risk Report: Canada Emerges as Money-Laundering Hub |
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The financial district of Toronto as seen on July 11, 2018. PHOTO: Brent Lewin/Bloomberg News
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Good morning. Canada’s record of fighting money laundering is under fire at home and abroad, The Wall Street Journal's Alistair MacDonald, Paul Vieira and Vipal Monga report.
Two-thirds of Canadian banks examined by regulators had “significant levels” of noncompliance with anti-money laundering rules, according to report to lawmakers reviewed by WSJl. The Royal Canadian Mounted Police estimated in 2011 that between $3.8 billion to $11.5 billion is laundered in the country annually.
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Critics of Canada’s approach say several factors stymie its efforts, including strict privacy laws making it difficult to obtain warrants, a reluctance to prosecute and the failure in some cases of banks to report suspicious transactions.
Canada’s finance ministry said it takes the fight against money laundering seriously, but the country logs few convictions compared with its peers, WSJ found, and authorities in other countries often are the ones to act.
Money-laundering specialists say regulators should shoulder responsibility, saying they don’t take a tough-enough stance or in some cases lack the authority to act. For example, one regulator can’t fine banks while the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, can but sparingly does.
Fintrac declined to comment on individual cases but said its actions are effective and resulted in an increase in companies reporting suspicious transactions and other improvements.
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FinCEN extends delay on automatically revolving accounts. An office within the U.S. Treasury Department delayed for another 30 days the implementation of part of a rule requiring banks to identify owners of corporate accounts.
The Financial Crimes Enforcement Network, or FinCEN, said Wednesday it would delay until Sept. 8 the requirement relating to specific financial products, such as certificates of deposit, "to further consider the issue."
The rule on identifying owners went into effect May 11. FinCEN issued the initial delay on May 16, citing concerns from financial institutions. -- Samuel Rubenfeld
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U.S. regulators are asking Tesla Inc. whether Chief Executive Elon Musk was truthful when he tweeted he had secured funding for what would be the largest-ever corporate buyout, WSJ reports, citing people familiar with the matter. Officials at the Securities and Exchange Commission want to know whether Mr. Musk had a factual basis for tweeting Tuesday the going-private transaction was all but certain, with only a shareholder vote needed to pull it off.
Two conservation organizations said they will sue the Trump administration for allowing on U.S. wildlife refuges the use of pesticides to kill bees and for permitting the growing of genetically modified crops, Reuters reports. The administration's decision reverses a policy put in place in 2014.
The U.K. is paying closer attention to what advertisers are communicating to children in commercials, and its regulator ruled Wednesday against one ad while approving another, New York Times reports. The Advertising Standards Authority said a McDonald Corp.'s ad met guidelines to promote healthier eating among children, but it rejected an ad from Kellogg Co.'s for its Coco Pops cereal.
The Trump administration’s plan to expand the federal government’s role in overseeing financial-technology startups has prompted pushback from some states, WSJ reports, setting up a fight over who will regulate new markets for online lending and other banking products.
New York's city council approved legislation Wednesday to cap the number of for-hire vehicles for a year while it studies the impact of services provided by companies such as Uber Technologies Inc. and Lyft Inc., Washington Post reports. The council also set a minimum wage to be paid to drivers. Mayor Bill DeBlasio said he will sign the bill.
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An Uber car drives in traffic on 6th Avenue in New York City on July 27, 2018. PHOTO: REUTERS/Mike Segar
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A federal judge dismissed Qatar from a lawsuit filed by prominent Republican donor Elliott Broidy, who claims the tiny Persian Gulf nation was behind the hacking of his emails last year, WSJ reports. Mr. Broidy sued Qatar and agents of the country in March after news publications wrote about the contents of his hacked emails.
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A Delaware judge said he had concerns about the medical condition of 95-year-old media mogul Sumner Redstone and declined to order he be deposed in the legal battle between his family’s holding company, National Amusements Inc., and CBS Corp. WSJ reports the judge struck from the court record representations of the ailing mogul’s responses to questions related to the case.
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Three more Japanese automobile companies were found to have improperly tested their vehicles for emissions and fuel economy, Reuters reports. The government claims Mazda Motor Corp., Suzuki Motor Corp. and Yamaha Motor Co. allowed vehicles to pass inspections even though they were tested under invalid conditions.
Scientists are challenging a high-profile study that found a popular gene-editing tool could be used to repair a disease-causing mutation in human embryos. WSJ reports two papers published in the journal Nature on Wednesday raised questions about the experiment, while the original research team responded with a new paper in the same journal they say bolsters key parts of their earlier work.
Papa John's International Inc. tried to distance itself further from founder John Schnatter, with the company's chief executive blaming him for a decline in sales, Washington Post reports. Mr. Schnatter resigned as board chairman in July after a recording surfaced of him using a racial slur. CEO Steve Ritchie said the company is committed to restoring its reputation.
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Saudi Arabia is ordering its citizens to leave Canada, selling its financial assets there and freezing trade between the two countries as part of an extraordinary diplomatic spat that has brought into global view the kingdom’s extreme sensitivity to Western criticism, WSJ reports. The actions follow Canada’s foreign ministry chastising Saudi Arabia for its recent arrest of human-rights activists. Reuters reports Saudi Arabia's energy minister says the spat won't
affect oil shipments to Canada.
Saudi Arabia has pressed independent energy analysts to alter its estimates of its oil production, WSJ reports, citing people familiar with the matter. The move could put it in conflict with other members of the fractious Organization of Petroleum Exporting Countries. The world’s largest oil exporter told OPEC it cut output in July, according to delegates, but estimates from the U.S. government and independent agencies say it boosted production. The discrepancy potentially could cause confusion in trading markets about how much oil is reaching consumers.
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A compromise among Toys “R” Us Inc., its lenders and creditors won court approval, making way for creditors to receive at least 22 cents on the dollar, WSJ reports. The settlement will shield the lenders from future litigation while boosting the recoveries of administrative claims holders, which includes vendors and other creditors owed about $800 million.
A California utility agreed to a $120 million civil settlement for a massive gas leak that drove thousands of families from their Los Angeles homes. WSJ reports Southern California Gas Co. will pay civil penalties and for programs to mitigate methane emissions for the October 2015 leak at the Aliso Canyon natural-gas storage field northwest of Los Angeles.
Tribune Media Co. ended its attempt to buy Sinclair Broadcast Group and sued the company for failing to make sufficient efforts to get their $3.9 billion deal approved by regulators, WSJ reports. FCC Chairman Ajit Pai last month expressed serious concerns about Sinclair’s submissions and sent it to an administrative-law judge, a severe blow to the merger’s approval chances.
Rite Aid Corp. and Albertsons Cos. called off their planned merger, a surprise decision in the face of mounting concern from investors. WSJ reports the retailers said late Wednesday they mutually agreed to remain separate. They canceled a shareholder meeting on the deal planned for Thursday.
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A store in the Rite Aid drugstore chain in New York on Jan. 9, 2018. PHOTO: Richard B. Levine/Levine Roberts/Newscom/Zuma Press
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The sweeping tax overhaul enacted by Congress last year created a special 20% deduction for small-business owners--and left many of them waiting to find out exactly who will benefit. On Wednesday, the Treasury Department provided some answers. Many high-earning real estate and insurance brokers will get the tax break while equally paid doctors, lawyers and financial advisers won’t, WSJ reports.
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Salesforce.com Inc. promoted President and Chief Operating Officer Keith Block to co-chief executive, giving him shared leadership of the business-software company with its co-founder and chairman Marc Benioff, WSJ reports. Mr. Block has largely focused on the company’s operations and said his promotion isn’t an indication Mr. Benioff intends to step away from Salesforce any time soon.
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Send complaints, comments and kudos to Ben DiPietro at ben.dipietro@wsj.com.
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