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Crime-Related Crypto Use Expected to Increase, Say Canada’s Financial Intelligence Agency

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Table of Contents

  • Canada’s Financial Intelligence Agency warns of a rising risk as criminals are expected to escalate their use of cryptocurrency for money laundering and concealing funds.
  • Fintrac’s annual report highlights the pivotal role virtual assets play in financial crimes, with a particular emphasis on the movement of proceeds from fraud and ransomware attacks.
  • Fintrac faces challenges in detecting illicit activities, prompting regulatory measures and advisories to combat the surge in money laundering.

In a recent annual report released on Monday, Canada’s Financial Transactions and Reports Analysis Centre (Fintrac) signals a concerning trend. The financial intelligence agency foresees an increase in criminals leveraging cryptocurrency to move and conceal funds beyond the conventional banking system.

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Fintrac’s strategic intelligence, as outlined in the report, sheds light on the pivotal role virtual assets play in money laundering and terrorist financing. The agency points to the most prevalent form of money laundering involving virtual currencies: the transfer of proceeds from fraud and ransomware attacks.

Eyes on Illicit Activities:

Fintrac employs sophisticated methods, electronically sifting through millions of data pieces annually from various sectors, including banks, insurance companies, and casinos. This enables the identification of funds linked to illicit activities, with subsequent intelligence disclosure to law enforcement agencies.

Challenges Amidst Technological Evolution:

Operating in a dynamic environment, Fintrac faces challenges posed by new technologies, evolving financial products, and rapidly shifting global financial systems. The agency’s director, Sarah Paquet, acknowledges these challenges in the report.

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Regulatory Measures and Challenges:

Businesses involved in foreign currency exchange, money transfer, and virtual currency transactions must register with Fintrac. However, the agency warns that unregistered money services businesses present challenges in detecting money laundering and terrorist financing through traditional financial channels.

May 2022 Advisory:

In May 2022, Fintrac issued an advisory to assist businesses and the public in safeguarding against illicit activities related to underground banking. The advisory highlighted key attributes of underground banking, particularly in metropolitan Vancouver, the Greater Toronto Area, and the Calgary-Edmonton corridor.

Rising Concerns and Increased Reporting:

Since the advisory’s publication, Fintrac notes a surge in reports on money laundering associated with underground banking. The agency has identified individuals and entities suspected of operating unregistered money services businesses. Suspicious transactions reported to Fintrac emphasize the crucial role of third-party intermediaries in facilitating underground banking and criminal proceeds laundering.

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International Dimensions:

The report underlines that underground banking through unregistered money services businesses remains attractive to international entities seeking to evade sanctions or engage in illegal activities, such as terrorist financing.

In conclusion, Fintrac’s latest report shows the state of financial crimes, particularly the increasing use of cryptocurrency by criminals. The agency is focused and with regulatory measures, aims to address these challenges and protect the financial system from illicit activities.

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