Canada is a good place for money laundering for the same reason legitimate business people like to do business here, one the country's foremost experts says.

Criminals want a politically stable country, a stable economy, close proximity to the U.S. market and top-quality banking and electronic communications systems, says Chris Mathers, an ex-RCMP officer who now has his own crime and risk consulting firm. "We're a good place to do business, whether you are a bad guy or a good guy."

Mathers also says the penalties for illegal actions are inadequate. "Nobody goes to jail for anything in Canada, so there's no deterrent," says Mathers, author of national best-selling book Crime School: Money Laundering. He was president of KPMG's corporate intelligence division before going solo with his own consulting company Last month, Toronto lawyer Simon Rosenfeld was sentenced to three years in prison after he was convicted in Toronto of money laundering.

Rosenfeld was one of 55 Canadian and U.S. citizens arrested in 2002 during an RCMP-FBI sting operation that exposed numerous money-laundering scams and stock-market manipulation.

Chris Mathers

Rosenfeld was found guilty of being one of three Canadian lawyers who agreed to help an undercover RCMP officer, who was posing as a representative of a Colombian drug cartel, move millions of dollars in investments that would hide their illegal origin.

Jurors heard Canada described as a money-laundering haven where transforming the proceeds of crime into clean money is 20 times easier than in the United States.

Mathers, a former RCMP undercover agent who has run money-laundering fronts, says he does not believe it is 20 times easier to launder money here. But he thinks criminals prefer to clean their money here rather than in the U.S. because, even if they are caught, they end up paying little.

"This is a country where very few people are expected to take responsibility for their actions," he says. Mathers adds that Rosenfeld will be a free man in one year, if he behaves in jail.

If Rosenfeld had been convicted in the U.S., he could have received a maximum sentence of 20 years. In Canada, the maximum is 10 years.

Last year, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) identified $700 million in suspicious transactions that are believed to be related to money laundering.

The federal government created FINTRAC in 2000 to detect and deter money laundering by providing critical information to support the investigation or prosecution of money-laundering offences. Before 2000, reporting of large transactions was voluntary.

Since 2001, however, financial institutions, life-insurance companies, securities dealers, real-estate agents, foreign-exchange dealers, money-services businesses, accountants and casinos have been required to report the identities of any clients who complete suspicious transactions or transactions of $10,000 or more.

Making reporting mandatory allows law-enforcement agencies to see where money from potentially illegal activities is flowing and more easily seize it, FINTRAC spokesman Peter Lamey says.

It has also required an increased level of knowledge among those who must ensure compliance with the federal legislation. One result is that Centennial College in Toronto recently expanded the number of sessions for its anti-money-laundering course, which is taught by Mathers and fellow ex-RCMP officer Ed Judd.

The course is typically taken by bankers, lenders, insurance company executives, police officers and others who might deal with large transactions.

Using case studies, participants examine the principles of money-laundering prevention and detection, as well as investigative techniques and the history of money laundering.

They also learn that criminals transform dirty money into clean money whose criminal origin is difficult to trace by disguising its sources, by changing its form or by moving money to a place where they are less likely to attract attention.

Some people use casinos to launder money while others use storefronts, Judd says.

"You have a business that doesn't really do anything, you have bogus clients, you use the money that you made from illicit purposes and say you got it through your business, you pay taxes on it and away you go - the money is legitimate," he says.

A number of foreign countries will accept large amounts of money into their banks. Criminals can then take that money and wire it to different locations around the world and when the money pops up again, it appears legitimate.

The construction and real estate sectors also can be targets of money-laundering schemes, and builders and agents can unwittingly become involved. A builder may be paid in cash to build a house for a drug dealer and, as a result, launders the dirty money.

FINTRAC's Lamey says many people do not realize the harm in money laundering.

"Sometimes it denotes a white-collar connotation where there doesn't seem to be any apparent victim," Lamey says.

"If a hockey bag of $20 bills is converted into a real-estate transaction, well, where's the harm in that?" But the transaction has allowed someone to benefit from the proceeds of criminal activity because the laundering is what makes the criminal activity worthwhile, he says.

"If someone is dealing drugs, they are able to continue because they've been able to convert their profits into something that looks legitimate."