Canada is typically thought to be a soft touch on white-collar crime. Today’s federal budget admits the problem, but offers little hope of a timely solution.

The 2008-09 budget explicitly recognizes that market enforcement is a problem in Canada. “Continued challenges with securities fraud enforcement in Canada underscore that further effort is needed to secure the integrity of our capital markets,” it says.

Indeed, a recent report from the International Monetary Fund singled out enforcement as one of the weaknesses of the Canadian system, and identified the lack of an integrated strategy of regulatory and criminal enforcement as a key issue.

In today’s budget, the government pledges to address this criticism. “The government is working with provincial and territorial authorities to strengthen enforcement,” the budget says, “through an approach that encompasses all aspects of this issue, both regulatory and criminal.”

The budget is, however, conspicuously short on specifics. The government says that it will consider requiring third-party witnesses to testify in capital markets cases — a systemic weakness that was identified in both the report by Nick Le Pan, as the recently appointed senior expert advisor to the RCMP’s much-criticized integrated market enforcement teams, and a federal-provincial-territorial securities fraud working group.

The budget notes that this power could contribute to improved enforcement. However, it is not yet committing to such a move.

“This is a complex issue that requires careful study,” budget documents note. “Therefore, federal and provincial-territorial experts will be examining this proposal and other enforcement measures for the consideration of federal and provincial-territorial ministers responsible for justice later this year.”

The only concrete measures in this year’s budget are designed to target money laundering and terrorist financing. It promises a further $10 million over the next two years to help combat this type of activity. The new funds are to be directed to the Canadian Security Intelligence Service and the Canada Revenue Agency’s Charities Directorate.

It also promises that it will act on any recommendations that come out of an evaluation of Canada’s anti-money laundering and anti-terrorist-financing regime by the Financial Action Task Force. That evaluation is expected shortly.

Additionally, the budget reports that administrative savings achieved by the existing anti-money laundering agency, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), will be plowed back into enforcement. The $2.2 million in annual savings realized by FINTRAC are being directed toward “increasing compliance activities and producing strategic information for Canadian intelligence and enforcement activities,” the budget says.

The government admits that Canada has an enforcement problem, but it doesn’t presume to offer any quick fixes in today’s budget.