Canada fighting fraud with new laws, enforcement

Canada's history and reputation as a "fraudster's playground" might finally be coming to an end as regulatory and enforcement authorities enter a more well-rounded anti-fraud regimen.

In the past, Canada's approach to fraud was plagued with inadequacies, which left investors vulnerable and victims with little chance of recovery. For instance, the Integrated Market Enforcement Team of the Royal Canadian Mounted Police (RCMP) has been deeply criticized for putting only a handful of white-collar criminals behind bars despite an annual budget of more than CAD$30 million. (See After Nortel verdict, RCMP's fraud unit racks up dismal conviction record, by Jeff Gray, The Global and Mail, Jan. 14, 2013, and the "Global Fraud Focus" column.)

In addition, the recent Sino Forest scandal, which spawned a trial that began in September 2014 and wrapped up in April 2016, demonstrated the significant shortcomings with Canada's approach to fraud investigations. (See Nobody will go to jail for Canada's biggest stock scandal, by Barrie McKenna, The Globe and Mail, April 22.)

The new era of fraud enforcement sees developments in three previously inadequate areas: enforcement, regulation and prosecution. Law enforcement will be able to more readily detect fraudsters and the crooks are more likely to be held accountable for their conduct. Fraud prevention, detection and recovery are becoming more realistic thanks to a greater focus on investigation and enforcement, the implementation of new regulatory tools and increasing tolerance of litigation funding.