Feds flag signs of cash linked to fentanyl scourge in new alert
Jim Bronskill, The Canadian Press
Published Wednesday, January 31, 2018 2:32PM EST
OTTAWA -- Traffickers are exploiting Canadian money service businesses to buy deadly fentanyl from overseas and then launder the proceeds through banks and credit unions, warns the national financial intelligence agency.
The federal Financial Transactions and Reports Analysis Centre is issuing a detailed operational alert to help businesses detect and report suspicious dealings that may be linked to illicit fentanyl, an opioid that is wreaking havoc across Canada.
The alert, which lists specific signs of fentanyl-related activity, was developed through Fintrac's analysis of intelligence in consultation with Canadian financial institutions and the RCMP.
It is intended to support a broader anti-fentanyl initiative, Project Guardian, led by Fintrac, major bank CIBC and Canadian law-enforcement agencies. CIBC is hosting a meeting of the various players Thursday in Toronto.
The opioid problem is not limited to large cities, noted Bob Kapur, deputy chief anti-money laundering officer at CIBC.
"It's everywhere, small towns as well. So we want to make sure that any police forces (that) are not yet aware of the project, or are not yet looped into what we're doing, they get involved," Kapur said in an interview.
"Obviously, CIBC and the other Canadian banks, we not only want to comply with the law in this regard, but this is the right thing to do."
Fintrac pinpoints cash linked to money laundering and terrorism by sifting through tens of millions of pieces of data annually from banks, insurance companies, securities dealers, money service businesses, real estate brokers, casinos and others.
In turn, the agency discloses resulting intelligence to partners including Canada's spy agency, the RCMP and other police services.
Financial intelligence suggests that traffickers procure fentanyl, as well as its derivatives and chemical components, from foreign sources, mainly in China, the Fintrac alert says.
Traffickers most often pay for these materials with wire transfers and money orders processed by money service businesses, but sometimes use virtual currency such as Bitcoin.
Fentanyl is typically smuggled into Canada through the postal system, then distributed through networks in a small area surrounding the arrival point, the alert says. "The laundering of the proceeds of fentanyl trafficking in Canada generally takes place through Canadian banks, caisses populaires and credit unions."
Fintrac is the first financial intelligence unit in the world to post an alert related to the lethal opioid, said Barry MacKillop, the agency's interim director.
Among the indicators a trafficker is using a money service business to procure fentanyl:
-- Wire transfers or money orders for amounts below the $10,000 reporting threshold at multiple money service businesses over a short time period, usually with cash or prepaid credit cards;
-- The transfers and money orders are sent by numerous, seemingly unconnected individuals in Canada to the identical recipients in China (especially Wuhan, Zhuhai, Guangzhou, Xianju and Shanghai), Ukraine and India;
-- The client's mailing address is a post-office box;
-- He or she receives multiple direct deposits from global payment processing and-or virtual currency exchange platforms in amounts below the reporting threshold.
MacKillop acknowledges many transactions take place in the shadowy corners of cyberspace. "I think shining the light on those obstacles is a first step in actually addressing them."
Signs of possible laundering of fentanyl proceeds through banks and other mainstream financial institutions include cash deposits followed by movement via email money transfers, transfers between accounts, drafts or cheques, or withdrawals, often at multiple financial institutions.
Another indicator could be significantly more email money transfers -- generally for small amounts -- than normal for a customer with his or her profile.
Dealings with firms that advertise pharmaceuticals, supplements, weight-loss medications and related products might also be red flags, the alert says. "These firms' transactions can -- knowingly or unknowingly -- be used to mask fentanyl trafficking, since they use packaging and shipping services similar to those in the fentanyl trade."
Banks, caisses populaires and credit unions are also urged to be on the lookout for clients who:
- Receive payroll deposits out of line with the job listed on his or her file, or multiple deposits with no apparent purpose that are inconsistent with the client's occupation, employment or income;
- Receive welfare or employment insurance payments, yet also get regular infusions of funds via email money transfers, wire transfers or cash;
- Deposit cheques, such as those for government assistance payments, endorsed by third parties;
- Frequently request drafts payable to themselves, or transfer funds to his or her accounts at other financial institutions.