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2022-05-05

FINTRAC Releases Key Characteristics of Illicit Underground Banking Through Unregistered Money Services Businesses

FINTRAC issued a new Sectoral and Geographic Advisory outlining the key characteristics and operational methods of illicit underground banking facilitated by unregistered money services businesses. The document highlights how criminal networks and professional money launderers exploit these informal value transfer systems in Metro Vancouver, the Greater Toronto Area, and the Calgary-Edmonton Corridor to launder proceeds and finance terrorism. It requires businesses and the public to report relevant suspicions to FINTRAC using the #SGA2022 tag to enable the generation of actionable financial intelligence for law enforcement and national security agencies.

Canada

Financial Transactions and Reports Analysis Centre Canada

News Release

May 5, 2022 , Ottawa Ontario

FINTRAC published today its new Sectoral and Geographic Advisory, Underground Banking through Unregistered Money Services Businesses, along with a video, to help businesses and Canadians better protect themselves against illicit activities associated with underground banking, and to facilitate the reporting of suspicions of money laundering or terrorist activity financing to FINTRAC.

Based on FINTRAC's analysis of suspicious transaction reports and financial intelligence disclosures to law enforcement related to underground banking, the Sectoral and Geographic Advisory describes key attributes of underground banking in Canada, particularly as it is carried out by unregistered money services businesses in Metro Vancouver, the Greater Toronto Area, and, to a lesser extent, in the Calgary-Edmonton Corridor.

While underground banking is important to diaspora communities to enable the sending and receiving of legitimate funds overseas, the versatility and global reach of these informal value transfer services make them susceptible to misuse, particularly by criminal groups for the purposes of money laundering and terrorist activity financing. The role of professional money launderers in facilitating underground banking is significant. Whether they are business owners, lawyers, accountants or real estate agents, they possess specialized skills, knowledge and networks to transfer or convert criminal proceeds via underground banking and other illicit methods, including the use of money mules, cuckoo smurfing and co-mingling of legitimate and illegitimate funds.

With the suspicious transaction reporting received from businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC is able to generate actionable financial intelligence to support the money laundering and terrorist activity financing investigations of Canada's police, law enforcement and national security agencies.

Quote

"We are committed to working with Canadian businesses and the public to help identify and target organized crime and other criminal actors who are using the underground banking system to launder their proceeds of crime or fund terrorist activities. Our new Sectoral and Geographic Advisory will help Canadians and Canada's businesses protect themselves from these illicit schemes and provide FINTRAC with the information we need to generate actionable financial intelligence for Canada's police, law enforcement and national security agencies."

Quick Facts

Failure to register a money services business could result in criminal or administrative penalties under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.

Anyone, including businesses and the general public, can provide voluntary information to FINTRAC about suspicions of money laundering or the financing of terrorist activities.

Businesses should include the term #SGA2022 in Part G—Description of suspicious activity when reporting suspicious transactions to FINTRAC .

Based on information received from Canadian businesses and the general public, FINTRAC generated more than 2,000 financial intelligence disclosures last year in support of investigations related to money laundering, terrorist activity financing and threats to the security of Canada, adding to the more than 22,000 financial intelligence disclosures that the Centre has provided since becoming operational in 2001.

In 2020–21, FINTRAC's financial intelligence contributed to 376 major, resource-intensive investigations, and hundreds of other individual investigations at the municipal, provincial and federal levels across the country.

As Canada's financial intelligence unit and anti-money laundering and anti-terrorist financing regulator, FINTRAC ensures the compliance of businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and generates actionable financial intelligence for Canada's police, law enforcement and national security agencies.

As part of its mandate, FINTRAC produces valuable strategic intelligence to inform the security and intelligence community, regime partners and policy decision-makers, Canadians and international counterparts about the nature and extent of money laundering and terrorist activity financing in Canada and throughout the world.