On May 5, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) published a Sectoral and Geographic Advisory concerning underground banking through unregistered money services businesses (MSBs) operating in Metro Vancouver, Greater Toronto Area and the Calgary-Edmonton Corridor. Such businesses do not fulfil the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and are susceptible to criminal misuse.
The report highlights three broad trends linked to underground banking and suspects unregistered MSBs:
Use of money mules
Suspected money mule accounts are identifiable because high volume third-party cash deposits do not align with the client profile. Subsequently, funds are rapidly depleted via email money transfers to unrelated third parties
Use of email money transfers and international wire transfers
Co-mingling of personal/business funds and use of both registered and unregistered MSBs
To detect and deter underground banking, the report calls for enhanced due diligence and strong compliance policies and procedures. From the consumer perspective, FINTRAC outlined actions consumers can take to better protect themselves, such as being wary of unsolicited phone calls, texts, emails or social media messages requesting personal information and offering easy money.
Restrictions in financial markets and fund transfers will continue to impact the supply and demand for underground banking. FINTRAC encourages consumers and organizations to report suspicious money laundering or the financing of terrorist activities.