In a recent speech to the Joint Securities Intelligence Unit Conference, Joe Oliver, president & CEO of the Investment Dealers Association of Canada, said that regulators and other enforcement bodies must cooperate to fight economic crime.

“Capital markets crime has become more varied and complex, increasingly trans-border, and often global in scope. Advanced technology and sophisticated financial engineering enable long distance, anonymous and instantaneous theft and fraud,” Oliver said. “The dilemma we confront is that while global in reach, economic crime is local in impact… This duality strains the capabilities of law enforcement and regulators, circumscribed by jurisdiction, geography and status.”

“To confront the challenge effectively, we must transform how we do business,” Oliver suggested. “The regulatory and enforcement assets at our disposal must be collectively viewed as a national resource, deployed for the benefit of Canada’s capital markets. That demands changes in attitude, new approaches to partnership and more flexible interagency cooperation.”

“It means that while respecting jurisdictional authority we must draw on specialized expertise and market intelligence and put purely turf concerns aside for the greater good,” he added. “It does not mean ignoring legitimate questions about how information can be appropriately and fairly shared.”

“The inevitable tensions are obvious, but they most be confronted creatively, because enforcement is key to efficient capital markets. Rules matter, but what frequently matters as much is the effective enforcement of rules. No matter how sound the rules may be in principle, if enforcement is ineffective, our regulatory reputation suffers, investor confidence is undermined and our capital markets will be undervalued,” he said.

Oliver noted that the IDA has entered into a wide variety of information sharing agreements with national and international regulatory and enforcement agencies. “Recent MOUs allow for the secondment of an IDA enforcement staff member to the IMET Joint Securities Intelligence Unit, information sharing with FINTRAC regarding suspicious financial transactions or examination concerns at member firms, and the transmittal to the AMF of ComSet Data on member firms,” he reported. “Our members understand that the IDA may provide information it obtains related to securities trading to domestic or foreign supervisory organizations and agencies.”

He also noted that inter-agency committees are another effective way to share information. It is also looking at broader policy initiatives to better confront economic crime, and it has called for special courts for white collar crime, and reform of, “our relatively lenient parole system”.

“Sophisticated economic crime, often conducted internationally, poses a threat to Canada’s capital markets,” Oliver concluded. “Collectively we share the responsibility for providing tough but fair enforcement. Breaking down barriers and sharing information is a key component in discharging that responsibility. There are Charter constraints, but with goodwill we can be effective.”