Ottawa is spending $5 million over five years to make Toronto the permanent headquarters of an organization made up of 101 financial intelligence units around the world, Finance Minister Jim Flaherty said yesterday, adding that Canada's new government will be relentless in its effort to fight terrorism financing.

His comments come as Canada's privacy commissioner investigates whether the U.S. government's efforts to track terrorists allowed it to improperly obtain private Canadian banking records.

"Just behind me is the heart of Canada's financial system," Flaherty said, standing atop a sunny platform by Lake Ontario. "We intend to keep it safe. Canada's new government will be relentless in its efforts to combat money laundering and terrorism financing."

Flaherty said he personally nominated Toronto as the global base for the secretariat of the Egmont Group. The group began informally in 1995 when representatives from multiple financial intelligence units around the world gathered at the Egmont-Arenberg Palace in Brussels to talk about how they could co-operate.

The Egmont Group now includes 101 financial intelligence units around the world, which share information. Canada's financial intelligence unit, Fintrac, has been a member since 2002.

The group has never had a permanent base office. Its Toronto location will house minimal staff.

Flaherty and Public Safety Minister Stockwell Day hosted a press conference yesterday to announce that and other measures Canada is taking in the effort to track the money trails of terrorists around the globe.

And, while the privacy commissioner has said she wants to see the scope of Canada's own financial intelligence regime minimized, government officials said yesterday they are pressing ahead with legislation to boost the regime, as it prepares to be reviewed by its international peers.

"We are going to be introducing legislation to improve and strengthen Fintrac's ability to increase its intelligence capability when it comes to the area of money laundering and transfer of dollars for terrorist purposes," Day said.

"When we choke off the lifeline of the financing and the support of terrorism, we choke off terrorism itself," he said.

Fintrac receives reports from bank tellers, casinos, real estate agents and others, who are required by law to report certain transactions over $10,000 as well as any suspicious transactions.

Privacy Commissioner Jennifer Stoddart has previously spoken out about the laws governing Fintrac, which she says "creates a mandatory reporting scheme that allows government officials to obtain access to personal information for investigatory purposes without judicial authorization and without satisfying the standard requirement of reasonable and probable grounds."

Flaherty said that the primary purpose of the upcoming legislation "is to make sure that we are taking a leadership role in terms of our money laundering and anti-terrorist financing efforts in Canada." He would not give details of the new legislation, but said the government will work with the privacy commissioner to balance "those privacy rights and concerns that she has primary responsibility for maintaining in Canada, which we value, and also the concerns that we have in Canada and the world community has with respect to money laundering, organized crime, terrorist activity and trying to intercede to reduce and hopefully cease the flow of funds used for those illegal purposes.

"We're going to be evaluated, as other member coun tries are, and we want to make sure that we have taken the steps that need to be taken to make sure that we're a leading jurisdiction," Flaherty added.

Canada will be evaluated by the Financial Action Task Force, an international body that develops and promotes policies to combat money laundering and terrorist financing.

Canada is heading up the task force beginning this month, with Canadian Frank Swedlove becoming president for a one-year term, Flaherty announced yesterday.

The task force produces report-card evaluations of how different countries are doing, and Canada's turn is coming up.

Flaherty spoke to Stoddart yesterday.

Anne-Marie Hayden, a spokeswoman for the privacy commissioner's office, said that "Flaherty, as well as others that we have been communicating with on this matter, have been very co-operative, and it is encouraging that they share our concerns and that they are taking this seriously."

Stoddart has been delving into the global effort to track the financial flows of terrorists, announcing last week that she has launched a fact-finding mission to determine whether Canadians' financial transactions are being improperly accessed by foreign authorities.

Her inquiries began after The New York Times revealed a secret four-year-old U.S. government program under which the CIA and government officials gained access to private records on international banking transactions such as wire transfers.

The U.S. treasury department received the information from an international co-operative, called SWIFT, which runs an electronic messaging system that thousands of banks and financial institutions around the world use to communicate.