BNN - Thursday, May 23, 2024 - 09:00 a.m. (ET) - Segment #8

financial crime in canada. Thanks very much for joining us. How would you characterize the scale of financial crime that is currently taking place in canada? >> Well, look at an estimated 113 billion dollars annually that's a pretty substantial portion of travel that if to canada's gdp and the by all accounts, the issue is getting worse, not better in part because the bad actors have figured out in this country, we have relatively limited capacity to tour, to enforce a global illicit financial flows and it drives everything from the cost of living. Estimated 2 have real estate prices by 8% based on the county commission on monday long, british columbia signings to the fentanyl crisis in the streets. And of course, fentanyl was a major part employed to these could a facing its investigation for. >> Just to be clear, the, the investigations in the U.S. are related to a canadian bank. But you've done a lot of work on what's happening within our own borders here in canada. I mean, how we got into this point, you alluded to a little bit, but but the things that would perhaps make canada a preferred destination for money laundering. >> So really, this goes back to 19 season. 1990's, a lot of it has its roots and the pacific expansion strategy in the 1990's and the catching government, where we open up to financial flows from the asia pacific. But with the relatively few controls in most roles and with relatively limited capacity in canada, we need to have a financial intelligence unit at the time and the end of a proceeds of crime team in the rcmp was subsequently disbanded and the government did some of the financial intelligence unit. But fintrac any over common aid institutions and other allied and partner countries is set up effectively as an administrative agency rather than enforcement agencies. It's enforcement powers of be a small, very weak. We can see this the latest find, for instance, against rbc, which amounts to 49% of the new ceo's annual bonus. It this is obviously not a major deterrent for canadian banks to try to improve their business practices when it comes to trans national global financial and economic right. >> Well, since you laid out the situation here in canada. And how might you compare over say here with the system set up in countries such as the U.S. or australia? >> Well, so look at the size of the fines here we have in the millions of dollars in australia com bank was fined 700 million australian dollars. Westpac was fined 1.4 billion. The 2 large casino companies were each fined 450 million and in the U.S. finds regularly 8 in the over a billion dollars. So you can see just scales are just completely plus in the u.s., this is something a lot of people don't talk about once you get a fine. He also faced significant regulatory oversight, reporting and the like is a financial institution. So it imposes significant immediate financial of the fine for ongoing basis. Costs in terms of the adage, regulatory burden of course, imposes reputation costs, none of there has been political will in canada to impose a financial institution. Here and you can bet that if happening with td in is happening all the major at the end it in the united states happening about all the major banks in canada. Well, one thing we hear about in ottawa's a desire to attract foreign investment to the country and certainly a lot of business leaders have views on successful can has been on that front. >> But on the subject like this, where does the federal government come in and what are the implications for attracting foreign investment, just based on our track record on the subject like this. So this is a great question and this is partially the government talks a good talk about doing more in financial crime, but actually has done relatively although he has, of course, moved on beneficial ownership. And he did make changes to some of the crypt virtual asset reporting requirements. >> But that was largely out of political interest during the convoy. Many shows that but that you can get major change. The the challenge for the govenment is that we live in a globally competitive environment. And so if you increase oversight to increased detection penalties and the like it makes came as a less competitive for foreign direct investment the financial flows into the country. And of course, under circumstance where the kenyan economy is already struggling, where on a per capita

canadians show feel. And arguably worse off today than they were 10 years ago, where the government came to their son of a sense that perhaps the government doesn't want impose additional constraints on the canadian economy. My to make further impede economic growth in this country. And of the financial industry is one of the outsize industries that drive canadian gdp. So imposing greater regulation would necessarily have an impact on, on, on gdp growth. And just a final question because, you know, people get really excited cryptocurrencies. But when it comes to the mechanics of modern-day financial crime. >> How does crypto even the blockchain fit into the bigger yesterday. And I think it's a really important question because financial crime, very with the globalization of financial crime. That's been supercharged by and a assets into cryptocurrency. We've really seen professionalization of money laundering where we actually now have the professions among law firms. And counting forms among real estate agents, all of which were called out by the county commission for their complicity here. And unwillingness to take their old professionals and told them check count for engaging and enabling intubating illicit behaviour. And this makes it difficult, inherently also for the bank. So we do have to cut them some slack because these professional money laundering making transactions. No perfectly normal anyone sovereign jurisdiction that you need to see the global picture and global close to understand that these are problematic. But of course, when you're dealing with cartel the U.S. regulator fincen is arguing that should have had the ability to pay better attention and close attention should have been able to detect and that, of course, important for canadian banks because we now have 3 mexican cartels that are active in canada. And as a result, canada is the largest renting like started to australia and a major exporter to europe. See can bet that cartel money is flowing to all the major institutions in this country as well. Some important issues to continue tracking christian. Thanks for your time this morning. Appreciate christian leuprecht is co editor of dirty money financial crime in canada. We're going take a quick break. We'll come back. Look at some of the stock stories that are making headlines in north america. >> Including ralph lauren with its latest quarterly results. Plus, we'll take a look at businesses with big profit margins. Nvidia, obviously a standout with its latest quarter results. How about a few others will have it in today's edition of the list. Energy Fuels, a leading American uranium producer, is ramping up production to supply expanding nuclear markets and diversifying into rare earth elements, key ingredients in many clean energy and defense technologies. Energy Fuels. Harvest Equal Weight Global Utilities Enhanced Income etf. The world's top utility companies in one etf, global Utilities and steady monthly income. Harvest ETFs, income happens here. Find a great deal foryour ideal hotel.Open trivago, type inwhere you want t select your check-in andcheck-out dates and search. Compare prices forthe same hotel and save up to $50 a night. Hotel? trivago. Hi Phil Swift here for FlexSuper Wide Duct Tape.Just check outhow wide this It's so widewe built this race boat. Not only can it speedacross the water, but our super strong backingcan take the pounding and our powerful adhesiveholds the boat together. Yee-Haa! Now that's whatI'm talking about. Woo Hoo! Get Flex Super Wide Duct Tape. Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, I got to gold. Hi, I'm Jessica Katrichak. Coming up on btv. Very rare to find this type of mineralization in your first couple of holes. So usually copper gold porphyries take maybe 20, 30, 50 plus. Nobody had really systematically looked for these type of deposits in the Yukon. So we're the first movers that are really looking systematically in this terrain for copper gold projects. Watch us online or here on bnn Bloomberg. Time for today's edition of

the list where we use bloomberg stated to bring you exclusive investment insights. We've been talking about nvidia's big quarter with the ai chip maker flexing its profit muscle. One of the numbers that really stood out with nvidia was its gross profit margins. They clocked in at more than 78% and looked teary how those margins compared to the rest of the so-called magnificent 7 stocks. As it turns out, nvidia is near the top of the list. The company is outpacing apple, amazon, alphabet and microsoft in the prophet march department. Only meta posted higher margins in its latest quarter at nearly 82%. Pretty impressive for meanwhile, this whole exercise also made us curious about which other tech companies out there have eye-popping gross margins. So we look to companies within the s&p 500 and the tsx. And we limited our search to businesses that reported gross margins north of 80% as of their latest quarter. Some of the stocks that filtered through include adobe, autodesk, canada's constellation software, cadence design, expedia game maker ea service now and pay com software outside of pei, cobb and expedia. All the other stocks mentioned are currently recommended despised by a majority of the analysts who cover that. Now moving to some stock movers that we're tracking in trading today. We want to bring in a bleak rafale cross asked or uber news. She joins us from new york with a few of the names on her watch list, including ralph lauren, emily. >> That's right. That's not actually reversing earlier losses and now is up almost 2% after reporting earnings. It was a mixed bag for those earnings. They missed on their 2025 revenue forecasts. But for the current quarter, the beat on eps and their sales came in line. Jon. Now it's interesting because they had this tepid forecast ac revenue in constant currency growing 2% to 3%. While the average analyst estimate was for a gain of about 4.4%. So that seem to be sinking. The stock just after the opening bell. But now we're that stock river bloomberg intelligence did say that that forecast looked a little bit low and seemed like it was going to perhaps lead to a beat. So perhaps they were over and are promising and over delivering for ralph lauren. Okay. And staying with the retail benton vf is another when you're watching today. This is another stock, jon, that seems to be pairing back those losses. At one point, the parent company of and sneakers and north face had fallen as much as 11% to the lowest level since 2009. It's now down just about 3%. But overall, the earnings were not looking very good for this retailer. Think reported 7 consecutive losses in of falling quarters of sales. When you look under the hood, the revenue in the vans sneakers department dropped 26% year over year. And then for the prior quarter, eps and sales also missed estimates. And this is coming after the stock has already fallen 34% year to date as less people are buying vans sneakers. I see a lot of adidas hamas on the streets of new york city and honestly, not a lot of anne's. Okay. Well, that's all you need to know. I'm a way that you get to share that with the street probably buy into that story. Investors seem to be buying into a story of dupont that splitting into 3 is better than one. This is another stock story you're tracking today. >> Dupont is now planning to their company into 3 different units. And this is following a growing trend that we're seeing of industrial conglomerates. Haas living their businesses think johnson and johnson general electric, what they're going to be splitting into. And they said this process could take about 3 years as they split their electronics and the water units for tax free transactions. And then the remaining 3rd business is going to be more narrowly focused on biopharma and medical devices. And analysts largely were cheering this we mentally U.S. research saying that dupont had struggled to kind of garner attention in the market as one. And you can see that in the year to date. Stock price is down about 2%. But perhaps in 3 different units that could make for a more exciting stock play. So keep an eye out for dupont and that 3 U.S. 3 for one, I guess flick coming for that company coming in the next 2 years. All right, emily, thanks very much for that breakdown. Few of the stocks on the move this legal failed. Joining us from new york. As for the broader markets, today really has been the story of nvidia helping the >> Nasdaq remain in positive territory, the s&p and tsx are in the red at this hour. Now,

Copyright protected and owned by broadcaster. Your licence is limited to private, internal, non-commercial use. All reproduction, broadcast, transmission or other use of this work is strictly prohibited.

Transcripts