Toronto will become the permanent home to a global organization aiming to combat international money laundering and terrorist financing, the federal government announced Friday.

Finance Minister Jim Flaherty and Public Safety Minister Stockwell Day helped make the announcement on the city's waterfront.

Finance Minister Jim Flaherty announces federal funding to establish a centre in Toronto for the Egmont Group, dedicated to track money laundering and terrorist financing.
(CBC)

The federal government will kick in $5 million over the next five years to establish the centre for the Egmont Group, a body that since 1995 has grown to encompass 101 world financial intelligence units, including the Financial Transactions and Reports Analysis Centre (FINTRAC) in Ottawa.

It was also announced that Canada has this week joined the Asia/Pacific Group on Money Laundering and that a Canadian, Frank Swedlove, will serve a one-year term as president of the G8 Financial Action Task Force, an international body that targets criminal and terrorist financing.

"This government has announced significant new measures to help increase Canada’s capability to detect and respond to a potential terrorist attack," said Day. "Whether it is strengthening our own laws, enhancing transportation and border security, working with international allies or combating the crime of terrorist financing, we are taking action to protect Canadians."

Flaherty said the initiatives were necessary to help better track not only traditional laundering but also wire transfers, non-profit organization donations and hawalas, the unregulated money transfers that lack paper trails.

The finance minister, who stressed that Canadians who conduct overseas banking are subject to foreign government scrutiny, said the issue involves balancing the needs of privacy and law enforcement.

Canada's privacy commissioner, Jennifer Stoddart, recently called an inquiry into whether Canadian transactions were probed as part of a U.S. financial monitoring program.

The Conservative budget in May earmarked $64 million to fight money laundering and terrorist financing. The Tories are expected to table legislation in the fall to tighten existing domestic law regarding money laundering.