Canadian Money Laundering Concerns December 2012

 Receives financial transaction reports and voluntary information on money laundering and terrorist financing  Ensure compliance of reporting entities with the legislation and regulations;  Produce financial intelligence relevant to money laundering, terrorist activity financing and threats to the security of Canada investigations;  Research and analyze data from a variety of information sources that shed light on trends and patterns in money laundering and terrorist financing;  Maintain a registry of money services businesses in Canada; FINTRAC MANDATE 3

 RCMP 59%  Municipal Police Services 18%  Foreign Financial Intelligence Units 19%  Provincial Police Services 21%  Canadian Security Intelligence 15%  Canada Border Services Agency 11%  Canada Revenue Agency 18% Main disclosure recipients from FINTRAC 4

 Fraud 33%  Drug 26%  Unknown 14%  Tax Evasion 5%  Customs/Excise 5%  Corruption 5%  Human Smuggling 4%  Theft 3%  Illegal Gambling 1% Types of predicate offences related to cases in

ML methods and techniques observed  Structuring and smurfing:  Cash purchases by one or many individuals of EFTs that fall under the reporting threshold;  Currency exchanges under $10,000 from CAD to USD or vice versa;  Cash purchase of money orders or bank drafts under $1,000 (which does not require identification) that are payable to third parties;  Depositing a large number of $20 bills totaling under $10,000.  Refining: Exchanging small-denomination bills for larger ones (e.g. $20 bills for $100 bills). 6

ML methods and techniques observed  Commingling:  Financial transactions suspected to be a mix of legitimate business revenue with criminal proceeds;  Businesses acting as fronts to make financial transactions appear more legitimate, indicated by multiple entities sharing a common address;  Holding numerous business bank accounts and conducting various transfers between accounts. Funds are then moved to one account and bank drafts are purchased.  Casinos - Cash purchase of casino chips, with minimal play, followed by the redemption of chips for either cash or cheque. 7

ML methods and techniques observed  Electronic funds transfers - Large funds transfers from a business account to individuals located in countries of concern.  Foreign exchange transactions:  Currency exchanges from CAD to USD or vice versa;  Large cash deposits, converted to USD, then wired to a country related to drug trafficking;  Currency exchanges followed by purchases of EFTs. 8

Businesses used in suspected ML drug-related cases:  Money Service Businesses  Construction/development industry  Shipping/freight companies  Import/export companies  Travel agencies  Real estate  Electronics  Pharmaceutical 9

Businesses used in suspected ML drug-related cases:  Convenience/grocery stores  Food and entertainment  Auto industry  Hydroponics/indoor gardening  Trucking companies  Gas stations 10

Countries Canada Sent disclosures 1. United States of America 2. United Kingdom 3. Bahamas 4. Belgium 5. Hong Kong 6. France 7. Australia 8. Luxembourg 9. Singapore 10. Germany 11

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