March is Fraud Prevention Month, so Canadians are getting loads of information to help them avoid being scammed. That’s terrific. It’s critically important to educate the public — and empowering average investors to protect themselves is both desirable and necessary. However, it’s also insufficient.

We can urge everyone to walk away if something looks “too good to be true,” but that advice really only helps those who can sense what’s implausible. And few can actually do that. A recent study, for example, found that only 12% of Canadians have realistic expectations about market returns.

Context compounds this naïveté. When banks earn more than 20% on credit card loans, why wouldn’t average investors believe that double-digit investment returns are attainable from something portrayed as a financial services institution? Why wouldn’t they be taken in by a swindler who says, “Trust me, this is how the wealthy make money,” when news reports show that the rich really are getting richer and they’re doing so through private access to lucrative deals.

Fraudsters are adept at using near-truths like these; and it’s a mistake to think that anyone is — or can become — too knowledgeable or sophisticated to be fooled. Victims of fraud come from all walks of life and every degree of experience and education. No one is immune. We are all at risk.

And while police forces, securities regulators, bank administrators and a phalanx of government agencies fight fraud earnestly and tirelessly every day, no formal strategy or framework exists in Canada to ensure they work together efficiently.

This must change if we truly want to win the battle against fraud. For starters, despite recent improvements in some parts of the country, we need better co-ordination between law enforcement agencies and securities regulators in gathering and sharing data about the incidence of investment fraud.

We also need to leverage existing resources and tools. For example, the leading-edge electronic systems that our Financial Transactions and Reports Analysis Centre uses to combat money-laundering can also be utilized to detect and interrupt fraudulent investment schemes, but that capability isn’t made available to securities regulators. Why?

Beyond detection and disruption of fraud, our primary aim should be deterrence. However, that requires a real commitment to purging Canada’s reputation of being soft on white-collar crime. We need to take a hard look at why some fraud cases get shunted to administrative tribunals instead of criminal court, and we also need to take an equally hard look at our legislative framework for sentencing. Why should someone face only a maximum five-year prison term for a fraud that’s prosecuted under the Securities Act when a conviction for the same fraud could yield a maximum 14-year sentence if prosecuted under the Criminal Code?

A legislative review should also address our laws’ seeming inability to stop incorrigibles such as Michael Mitton, a career criminal who recently notched his 100th conviction for fraud, market manipulation, money laundering and related offences. Serial fraudsters like Mitton can’t be jailed indefinitely as dangerous offenders because their crimes don’t involve physical assaults; yet the financial harm they inflict is devastating and impacts many victims just as profoundly as any bodily harm.

We need to rethink these things. If an honest debtor in bankruptcy must have his or her financial affairs scrutinized for months or even years, surely we can craft legislative constraints denying convicted scammers unsupervised access to the banking system. Likewise, beyond banning con artists from involvement with public companies, as the provincial Securities Acts now do, shouldn’t we also put in place mechanisms to ban them from incorporating or operating any private company, business entity, proprietorship or trust so they can’t use the veneer of business respectability to prey on additional victims?

Also, we know a lot of investment frauds involve unregistered individuals, and they tend to engage in the more egregious scams. Yet, in many parts of the country, non-registrants are allowed to sell exempt-market securities to the public. This keeps a known window of vulnerability open. It also garbles educational messaging about the importance of checking registration before you invest.

Lastly, our politicians must resist the temptation to embrace economic fixes that are designed to stimulate markets but make it easier for fraudsters to operate. Urging the adoption of equity crowdfunding is a prime example of this. Our policy-makers need to consider carefully how much of these initiatives’ expected economic gains will be undone by the parasitic effect of the frauds these same programs almost certainly will attract. And if regulators still opt to go ahead, they need to develop and adopt robust investor protection measures that truly address the forecasted problems.

Effective fraud prevention requires multi-pronged efforts extending well beyond a public education campaign. So, as this year’s Fraud Prevention Month draws to a close, let’s keep in mind that there’s much work still to be done every month — and significant commitments to be made.