Financial Intelligence Agency highlights criminal risk of underground banking


Canadian financial intelligence agencies have warned that unregistered money transfer services are ripe for abuse by criminals trying to launder cash and fund terrorist activities.

With a new advisory on the risks of underground banking, Canada’s Financial Transactions and Reporting Analysis Center, known as Fintrac, will help everyone, from students to seniors, to disguise shaded cash through such services. It states that it can be deceived.

Fintrac identifies money related to fraud by electronically screening millions of pieces of information each year from money services businesses, banks, insurance companies, securities dealers, real estate brokers, casinos and more.

Next, we will disclose information to police and other law enforcement agencies about suspicious cases.

The new advisory cites trends and patterns from Fintrac’s analysis of transactions and disclosures to enforcement agencies related to underground banking.

It focuses primarily on unregistered money services businesses in the Metro Vancouver and Greater Toronto Areas, but not so much in the Calgary-Edmonton Corridor.

Many people in Canada use money services that often operate outside of traditional banking systems to send cash abroad. Benefits include lower fees and exchange rates, faster transactions, and the ability to transfer funds to locations where there is no formal banking service.

These businesses operate within the Diaspora population and may provide informal relocation services to community members and expatriates, Advisory Note said. If the intermediary setstles the account in a variety of other ways, the cash may not actually be sent.

Individuals and organizations that provide such monetary services must register with Fintrac, or they may face administrative or criminal penalties.

“The limited visibility and lack of transparency associated with underground banking transactions poses an inherent risk of money laundering and financing of terrorist activities,” says the advisory.

Based on that analysis, Fintrack is a criminal proceeds to avoid the restrictions imposed by international sanctions, for example, on some of the funds transferred through underground banks and unregistered money services businesses. Or suspect it is illegally transferred funds.

“Canada has a lot of diaspora communities, and people want to maintain relationships with their home countries, some of which include financial support,” said Fintrack’s Deputy Director of Policy and Analysis. Annette Ryan said.

At the same time, Ryan said in an interview that Fintrack “wants people to be aware of the risks” and that people running these types of businesses are responsible for registering them.

Advisory says professional money launderers use a variety of techniques to transfer value and obscure the identities of those who manage their money.

Money mules (people who send dubious money or transport criminal proceeds) may deliberately cooperate or work unknowingly on behalf of the money laundering network.

“Students, housewives, unemployed people, the elderly and migrant workers are frequent targets for money mule recruitment,” says the advisory. “Victims of fraud can be abused or forced to become money mules. Criminals use victims’ bank accounts to illegally place and transfer funds. I can.”

Fintrac found that the suspicious money mule account received a large number of third-party cash deposits and email transfers that did not match the client’s profile.

According to the advisory, money was quickly exhausted, primarily by email transfers and banker’s drafts to unrelated third parties. “These funds were also used for investment, real estate and vehicle purchases to be shipped to West Africa and Asia.”

Many of the suspicious money mules were international students who received wire transfers from individuals and groups in China and Hong Kong, as well as email transfers and bank checks from third parties in Canada.

“These transactions do not necessarily indicate a direct link to money laundering, but the lack of details to justify the transaction is a concern.”

Cuckoo birds lay eggs in other bird’s nests and trick them into raising freshly hatched birds. In this way, the advisory states that money launderers use a technique called cuckoo murfing to pretend that criminal proceeds come from legitimate sources of funding and transfer funds between jurisdictions. I am.

This technique relies on the bank account of an unconscious third party (usually the bank account of people in the Diaspora community who expect to send money) to deposit illegal cash.

Companies controlled by professional money launderers could invoice real or fictitious transactions by misrepresenting the true value of cross-border goods, Fintrack said. increase. In addition, they may mix trade payments and remittances with earnings through the money services business.

Individuals own convenience stores, holding companies, construction / general contractors, and import / export businesses that share addresses and phone numbers with the money service business, and there is a mixture of personal and business accounts related to money service activities. It looked like there was.

Fintrac believes that some money service providers may have misrepresented the nature of their business to banks in order to access financial services, and federal agencies say they receive illegal money. Suspected to be a front or shell company for.

“Many of these companies received funding from organizations related to organized crime, drug trafficking, or law enforcement investigations into money laundering and sanctions avoidance.”

The suspicious transaction highlighted the general flow of funds from Iran and China to Canadian companies, primarily via the United Arab Emirates, Hong Kong and Qatar. “Then, these entities have transferred funds to multiple Canadian individuals and entities through bank checks, checks and direct debits.”

Fintrac says that people who send money to and from abroad can protect themselves by paying attention and dealing only with financial institutions and reputable registered money services businesses.

“Beware of one-sided phone calls, texts, emails, or social media messages that request personal information to avoid becoming a money mule.

“In addition to a direct overture, fake business advertising can draw potential money mules into unknowing participation in money laundering plans. Recruitment via social media is quick and easy with money. There is a tendency to focus on the attractiveness of an attractive lifestyle. “

Jim Bron Skill

Canadian press

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