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Sino-Canadian trade is becoming increasingly intertwined with national-security issues.
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A bilateral law-enforcement working group is meeting in Beijing this week to discuss enhanced police co-operation in combating transnational crimes. The tête-à-tête comes in the wake of a memorandum of understanding between the RCMP and Beijing’s Ministry of Public Security. It was signed in January, but the terms remain secret.
If you’re confused about how China has so quickly evolved from being Canada’s biggest security threat [PM Mark Carney said in April 2025 that China is one of the largest threats with respect to foreign interference in Canada and is an emerging threat in the Arctic] to its trusted ally in information sharing, you’re not alone.
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Now consider this: A pair of confidential intelligence reports from the Financial Transactions and Reports Analysis Centre of Canada, or FinTRAC, previously warned the federal government of financial crime risks related to China, including through trade.
FinTRAC, Canada’s anti-money laundering watchdog, prepared the strategic intelligence backgrounders months before Prime Minister Mark Carney’s trip to China in January.
Heavily redacted versions of those documents were obtained by Ottawa-based researcher Ken Rubin through a request made under the Access to Information Act and then shared with The Globe and Mail. The details that managed to escape government censorship prompt one to question if Canada is disregarding its own intelligence.
One confidential report, titled Canada’s Cross-Border Money Laundering and Threat Financing Risks, was prepared in August of 2025. It states, in part, that “professional money launderers use international trade transactions to launder and move the proceeds of crime between jurisdictions and currencies.”
Although FinTRAC does not provide its own estimate for Canada, trade-based money laundering is a global problem estimated to be worth as much as US$1-trillion a year. It taints supply chains and compromises the integrity of international trade as cleansed criminal proceeds re-enter countries’ economies.
“These schemes may involve falsified customs, shipping and trade finance documents that misrepresent the quality or type of goods shipped and move value between jurisdictions,” states the FinTRAC report.
China, India among countries active in foreign interference and spying in Canada, CSIS says
China is Canada’s second-largest trading partner after the United States, with two-way goods and services trade totalling $130.9-billion in 2024.
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FinTRAC has identified Canadian examples of what is known as the Black Market Peso Exchange, a form of trade-based money laundering that facilitates foreign-currency conversions using underground banking schemes, involving Latin America, Hong Kong, China and the U.S., according to its intelligence report.
The Black Market Peso Exchange remains a favourite tool of narcotics traffickers. The illegal drug trade is just one of the issues that is expected to be discussed by Canadian and Chinese law-enforcement officials in Beijing this week.
Drug trafficking is Canada’s largest money-laundering threat, according to FinTRAC, which also noted that illicit monies end up contaminating the property market.
“FinTRAC has also identified incoming electronic funds transfers structured below currency restrictions imposed by other countries, such as China and Iran, and sent to individuals in Canada, which are then invested in real estate,” its report said.
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FinTRAC also warns that underground banking is a vector for foreign interference and espionage by the Chinese Communist Party. Those activities not only harm members of the Chinese diaspora living in Canada but also pose a national-security threat.
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The second intelligence report, titled Threats to Security: China-linked Professional Money Laundering via Underground Banking, is dated July, 2025. It states that China’s currency controls, which limit individuals from transferring out of China the equivalent of US$50,000 a year, are driving demand for underground banking.
The business model of China-linked professional money-laundering organizations has “two distinct customer groups,” including individuals trying to move capital out of China and transnational criminal groups sending dirty money abroad, according to the report.
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FinTRAC notes that “China-linked money launderers are squeezing out Mexican and Colombian rivals, and undercutting them on price by more than half by levying fees on both sides of the transaction.” That, in turn, allows transnational criminal organizations to pocket more money, the report said.
FinTRAC’s report also notes that suspected money mules receiving large cash deposits or wire transfers from parties located in China and Hong Kong end up funnelling those funds into bank drafts payable to individuals or entities in sectors including casinos, real estate, securities, automotive and the legal profession.
Additionally, the regulator identified the use of Chinese mobile banking applications, such as Alipay and WeChat Pay, by underground banking networks. Those apps, however, sometimes intersect with Canadian payment processors, providing a glimpse into the problem, the report added.
Mr. Wang, China’s Foreign Affairs Minister, recently said boosting bilateral trade depends on Canada having “strategic independence” from the U.S.
Canada’s own financial intelligence suggests Ottawa should take that approach with Beijing, too.
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