TORONTO — There was an awkward moment Tuesday when Canadian Prime Minister Jean Chretien, standing by President Clinton at a Rose Garden news conference, responded a tad hastily to a reporter's question.
What about the illegal drugs flowing across the US-Canadian border, Mr. Chretien was asked? "It's more trade," he replied straight-faced.
Apparently reacting to Mr. Clinton's astonished look, he backtracked: "I heard 'trucks,' " he said, shrugging. "I'm sorry." "I'm glad we clarified that," Clinton said.
It was the only sour note in a warm meeting between Chretien and Clinton during the Canadian leader's first official visit to Washington this week.
But behind that fleeting moment of public tension is genuine concern among US officials over Canada's continuing role as a major money-laundering nation for the globe's drug traffickers, according to a new US State Department report on narcotics trafficking.
"Canada's advanced financial sector, lack of mandatory reporting requirements, and proximity to the US make it attractive to drug-money launderers," says the 1997 International Narcotics Control Strategy Report. "Canada has no cross-border currency reporting requirement."
Canada is rated a "high priority" country, listing it among the top 21 countries where greater efforts are needed to squelch drug-money laundering. Bulk shipments of cash into Canada from the US are often deposited in local accounts prior to having the money wired to a third country. Also, currency exchange houses are suspected of moving large amounts of drug money between the US and Canada, the report says. The exchanges are not required to report large transactions to Canadian authorities, but are required to keep records for five years.
WHAT the US would like to see is for Canada to require anyone transferring more than $10,000 by wire or carrying it in cash across the border to declare it. Both the Royal Canadian Mounted Police (RCMP) and the Canadian Bankers Association say they support mandatory reporting of suspicious transactions, but Parliament has yet to act.
"We're doing all that we can, but we are limited by our legislation," says Sgt. David Johnson of the RCMP in Ottawa. "Right now anyone can come into Canada with any amount of money."
Despite such gaps in the law, the US praises Canadian law officials for their cooperation with US authorities.
Jack Blum, a Washinton attorney, says Canada is a useful tool for drug-money laundering. "Canada is very important. It's a place where American money is widely accepted. A lot of American cash is going there for shipment elsewhere," says Mr. Blum,who has worked on money laundering cases for years for the US government and financial institutions.