Crime pays? The proceeds of crime and money laundering hold virtually no secrets for CMA and forensic accountant Michel Desmarais, who helps make life difficult for offenders. (Profile).

Michel Desmarais began working in forensic accounting by accident, not by design. Today he is passionate about this new field in Canada, which he helped create. "The main strength of the Forensic Accounting Directorate (FAD) is that from the outset, it asked questions, assessing the nature of the forensic accounting needs created by the new legislation on the proceeds of crime and money laundering," explains Desmarais, who is the director of FAD, part of the money laundering," explains Desmarais, who is the director of FAD, part of the professional services division of Public Works and Government Services Canada, and a member of the organizing committee for the 2001 International Money Laundering Congerence being held in Montreal October 15 to 17. Changes to the Criminal Code now allow the seizure of the proceeds from crime.

Forensic accounting is a relatively new field that is only just beginning to be taught in universities. Desmarais became interested in it after being parachuted into a major criminal investigation being conducted by the Royal Canadian Mounted Police (RCMP) in the early '90s. However, he quickly realized that what was expected from him, within the context of a joint effort by a multidisciplinary team, had not been defined. "I learned on the fly, and most of the people who work for me were trained in the same way," he explains. "Moreover, the RCMP, tasked with the nationwide implementation of the Integrated Proceeds of Crime Units (IPCU), had not really considered the forensic accounting services required by the new legislation." Lawyers, officers from various police corps, accountants, Revenue Canada agents and multiple specialists were then assigned to work together in the future.

Three teams were created initially in Montreal, Toronto and Vancouver. Desmarais remembers the first major operation for the Montreal team, in which double agents from the RCMP set up a fictitious exchange office right in the middle of downtown Montreal. "This banking outlet attracted money launderers. The agents conducted all transactions requested by the criminals and observed the flow of money. We had only rudimentary tools, and we were all learning." The establishment was active for four years. Major criminal organizations in Montreal were tracked through this front, which represented something of a test for the new legislation. Substantial assets were seized, and the teams involved were able to deepen their understanding of money laundering.

At the time, Desmarais recognized that he had been given an extraordinary opportunity to innovate within the accounting profession, as well as serve a cause whose devastating effects were already evident at all social and economic levels. With the help of a forensic accounting colleague, he began by evaluating the market and consulting the major stakeholders. He interviewed more than 75 people across the country: police investigators, lawyers, judges, criminologists, academics, the managers of seized assets and public accountants. The objective of these interviews was to determine the key factors to be considered in establishing a multifunctional management model that would unite various stakeholders with a common goal but different interests.

Rendering accounts

"We succeeded in creating and implementing a national forensic accounting program for investigations of the proceeds of crime and money laundering," Desmarais says with pride. He adds that the main problem they encountered was resistance to change, present at every step in the development of this new approach. He had to devise a uniform, cost-effective national program, focused on one fundamental objective: rendering accounts to the Court. It was also necessary to determine what sequence of procedures would best serve the interests of the Crown. "That took a great deal of determination and unrelenting tenacity. It was a substantial challenge, but we met it." He notes that if his team had not been determined to make the project a success, establishment of the directorate in its current form would have been impossible.

The proceeds of criminal activity are not just luxury cars or palatial homes; they also include other types of assets. "The larger the assets, the more complicated our task becomes," says the FAD director. When criminals own companies and many do business internationally, forensic accounting can assume unexpected dimensions. According to Desmarais, it then becomes necessary to concentrate on international finance and trade, and the use of tax shelters and banking systems around the world. He adds that given the huge loopholes in international legislation and regulation, organized crime gladly exploits whatever opportunities it finds.

In the view of Desmarais and the forensic accounting profession in general, the situation has evolved a great deal in the last 10 years. "Organized crime constantly updates its methods, and we have to make sure that the gap between money laundering operations and our knowledge of them remains as narrow as possible," he explains. The development of e-commerce introduced a new nightmare for accountants because it doesn't create the familiar adult trails.

"We have to detect trails that may assume a different form and find a way to make up for the lack of evidence, or we will never succeed," admits Desmarais. And to be able to one day participate in the institution of international regulations on money laundering, the Canadian teams must continually be on the lookout for developments in the field. Canada is already regarded as one of the leaders in if the fight against money laundering, and other countries have begun to implement the methods designed by Desmarais and others.

Desmarais enjoys passing on his expertise and understanding, recently doing so for a United Nations' group and for the Canadian International Development Agency (CIDA) in South Africa. As a CMA, Desmarais is very pleased that within the public service, with the aid of his team and his clients, he has acquired an expertise that is now essential for the investigation of crime and money laundering proceeds. He is also delighted to have been able to help the government fight organized crime, through the use of innovative methods, and to have succeeded in establishing a new group that serves the interests of the Canadian people while contributing to Canada's international reputation.

Desmarais fervently believes that the quality of life of future generations must not be threatened by problems worse than those we face now, and that is what motivates him to pursue his fight. He is convinced that his experience proves that when areas of complex expertise are called for, public sector employees can be just as innovative as those in the private sector.

Julie Demers is the associate French editor of CMA Management.