Financial intelligence agency sheds light on criminal risks of underground banking

Canada’s Financial Intelligence Agency warns that money-transfer services are ripe for abuse by criminals who attempt to launder money and finance terrorist activities.

In a new advisory on the risks of underground banking, the Financial Transactions and Reports Analysis Center of Canada, known as Fintrac, says everyone from students to the elderly could be duped into helping hiding shady money through such services.

Fintrac identifies money related to illicit activities by electronically sifting through millions of pieces of information every year money-service companies, banks, insurance companies, securities dealers, real estate brokers, casinos and others.

In turn, it releases information to the police and other law enforcement agencies on suspected cases.

The new notice cites trends and patterns in Fintrac’s analysis of transactions and disclosures to law enforcement related to underground banking.

It focuses on the unregistered money– service companies mainly in the Greater Vancouver and Greater Toronto Area and, to a lesser extent, in the Calgary-Edmonton corridor.

Many people in Canada use money services, which often operate outside the conventional banking system, to send money overseas. Benefits can include lower fees and exchange rates, faster transactions, and the ability to transfer funds to places without formal banking services.

These companies could operate within diaspora populations, providing informal transfer services to community members and expatriate workers, the notice notes. Sometimes no money is actually transferred, with intermediaries settling accounts through various other means.

Individuals and organizations that offer such money services must register with Fintrac and may face administrative or criminal penalties if they fail to do so.

“The limited visibility and lack of transparency associated with clandestine banking transactions pose inherent problems money money laundering and terrorist financing risks,” the notice states.

Based on its analysis, Fintrac suspects that some of the funds were transferred via underground and unregistered banking services. money-the service companies were the proceeds of crime or funds transferred illegally, for example to evade the restrictions imposed by international sanctions.

“We recognize that Canada is home to many diaspora communities and that people want to maintain their ties to their home countries, and part of that involves financial support,” said Annette Ryan, deputy director of policy and analysis at Fintrac.

At the same time, Ryan said in an interview, Fintrac wants people to “be aware of the risks” and that those who operate these types of businesses have a responsibility to register them.

Professional money Launderers use a variety of techniques to transfer value and conceal the identity of those in control of the funds, the notice said.

Money mules – people who transfer sleazy money or transport the proceeds of crime — might knowingly cooperate or unwittingly work on behalf of a money laundry network.

“Students, housewives, the unemployed, the elderly and migrant workers are frequent targets for money recruiting mules,” the notice reads. “Victims of fraud can be exploited or coerced into being money slippers. Criminals can use the victim’s bank account to place and transfer illicit funds.

Suspected money mule accounts received a high volume of cash deposits and 3rd party emails money transfers that did not match the client’s profile, Fintrac discovered.

the money sold out quickly, mostly via outgoing emails money wire transfers and bank drafts to unrelated third parties, the notice states. “These funds were also used to buy investments, real estate and vehicles shipped to West Africa and Asia.”

A number of suspects money the mules were international students receiving electronic transfers from individuals and entities in China and Hong Kong, as well as e-mails money wire transfers and third-party bank drafts in Canada, the agency found.

“While these transactions do not necessarily demonstrate a direct link to money money laundering, the lack of details that would establish the transactions as legitimate is a concern.

Cuckoos lay eggs in the nests of other birds, prompting them to raise their hatchlings. In this vein, money Launderers use a technique called cuckoo smurfing to make the proceeds of crime appear to come from legitimate sources and to transfer funds between jurisdictions, the notice said.

This technique relies on the bank accounts of unwitting third parties – typically those of members of diaspora communities awaiting remittances – to make illicit cash deposits.

Companies controlled by professionals money launderers can issue invoices for real or fictitious trade, misrepresenting the true value of goods crossing borders, Fintrac says. Also, they could mix receipts with trade payments and remittances through money– service companies.

Individuals owned convenience stores, holding companies, construction and general contracting companies, and import-export businesses that shared addresses or phone numbers with money-service companies, and seemed to mix personal and business accounts linked to money– service activity.

Fintrac believes that some money-service operators could misrepresent the nature of their business with banks in order to access financial services, and the federal agency suspects that they are front or front companies to receive money.

“A number of these companies have received funding from entities linked to organized crime, drug trafficking or law enforcement investigations. money money laundering and evasion of sanctions.

Suspicious transactions highlighted a general flow of funds from Iran and China, primarily via the United Arab Emirates, Hong Kong and Qatar, to Canadian companies. “These entities, in turn, transferred the funds to multiple individuals and entities in Canada through bank drafts, checks and account transfers.”

Fintrac says people transferring funds to and from overseas can protect themselves by exercising caution and only dealing with reputable, registered financial institutions and companies. money– service companies.

“To avoid becoming a money mule, beware of unsolicited phone calls, text messages, emails or social media messages asking for personal information, and offers that seem too good to be true,” the notice reads.

“In addition to direct overtures, false commercial advertisements can attract money mules to involuntarily participate in money whitening regimens. Recruitment via social media tends to have a strong emphasis on the appeal of speed and ease. money and attractive lifestyles.

Jim Bronskill/The Canadian Press

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