Latest News from FINTRAC
August 10, 2020
Keeping on top of the latest advisories and guidances from Canada's FINTRAC. This blog will update with any new information from the regulator as it becomes available.
July 27, 2020: FATF and North Korea
Financial transactions related to countries identified by the Financial Action Task Force (FATF).
As communicated in the FATF's statement on high-risk jurisdictions subject to a call for action, dated 30 June 2020:
"On 28 April 2020, the FATF decided on a general pause in the review process for the list of high-risk jurisdictions subject to a call for action. Therefore, please refer to the list of High-Risk Jurisdictions subject to a Call for Action adopted in February 2020.
While the statement may not necessarily reflect the most recent status in Iran and the Democratic People's Republic of Korea's AML/CFT regime, the FATF's call for action on these high-risk jurisdictions remains in effect."
Democratic People's Republic of Korea (DPRK). As communicated in the statement on high-risk jurisdictions subject to a call for action dated 21 February 2020, the FATF stated the following:
FATF "Remains concerned by the DPRK's failure to address the significant deficiencies in its anti-money laundering and combatting the financing of terrorism (AML/CFT) regime and the serious threats they pose to the integrity of the international financial system. Further, the FATF has serious concerns with the threat posed by the DPRK's illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing."
Read the entire brief here
July 25, 2020: Iran
Guidance related to the Ministerial Directive on Financial Transactions Associated with the Islamic Republic of Iran issued on July 25, 2020
The Financial Action Task Force (FATF) issued a statement in February 2020 which expressed concerns regarding Iran's failure to address strategic deficiencies in its anti-money laundering and combatting the financing of terrorism (AML/CFT) regime, and the serious threat this poses to the integrity of the international financial system.
The FATF called on its members to apply effective counter-measures to protect their financial sectors from such risks. Canada's Finance Minister, using the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) issued this MD.
This directive means every bank, credit union, financial services cooperative, caisse populaire, authorized foreign bank and MSB must:
- treat every financial transaction originating from or bound for Iran, regardless of its amount, as a high-risk transaction;
- verify the identity of any client (person or entity) requesting or benefiting from such a transaction;
- exercise customer due diligence, including ascertaining the source of funds in any such transaction, the purpose of the transaction and, where appropriate, the beneficial ownership or control of any entity requesting or benefiting from the transaction;
- keep and retain a record of any such transaction, in accordance with the PCMLTFA; and
- report all such transactions to the Centre
For further clarity, this MD does not apply to transactions where there is no suspicion or explicit connection with Iran and there is no evidence of the transaction originating from or being bound for Iran. For example:
Read the entire guidance here
July 2020 Special Bulletin on COVID
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued a special bulletin on their analysis of transaction reporting during COVID-19 pandemic.
The Canadian Anti-Fraud Centre's (CAFC) analysis of fraud reporting has shown areas that may pose an increased money laundering risk associated with the exploitation of the pandemic.
While the COVID-19 pandemic has not had a significant impact on the overall volume of suspicious transaction reports (STR) and electronic funds transfer reports (EFTRs), the volume of casino disbursement reports (CDR) and large cash transaction reports (LCTR) has significantly decreased.
FINTRAC says the overall decrease in large cash transactions is likely a result of the physical distancing and public health measures as they have resulted in a general decline in cash transactions and business closures, including casinos.
While large cash transaction decreased, there was an 86 per cent increase associated with reporting from dealers in precious metals and stones.
An analysis of STRs containing a reference to COVID-19 highlights general suspicions of money laundering based on the nature of transactions, FINTRAC stated.
They also reported they are suspicions of the laundering of fraud proceeds as Financial Intelligence Units in other jurisdictions have reported similar findings.
The COVID-19 pandemic represents an unprecedented situation that may lead to unusual transaction activities, FINTRAC stated. While many unusual patterns may reflect legitimate needs to access financial services during this challenging time, some individuals may attempt to profit from the current situation to facilitate money laundering.
The COVID-19 pandemic, and associated closures and physical distancing measures, has disrupted some money laundering methods - particularly those that rely on the placement of illicit cash into cash-intensive businesses - and may expose criminals seeking alternate venues to integrate illicit proceeds into the financial system.
Read the entire brief here
April 2020: Suspicious Transaction Reports
All reporting entities (REs) and individuals employed by REs must report suspicious transactions under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations.
An employee is only expected to report STRs to FINTRAC should they believe that their employer has not submitted an STR as prescribed by the PCMLTFA and associated Regulations.
This April 2020 guidance should be read in conjunction with the two other suspicious transaction reporting guidance documents:
- Reporting suspicious transactions to FINTRAC; and
- Money laundering (ML) and terrorist financing (TF) indicators (ML/TF indicators)
This guidance document answers the following questions:
- What is a suspicious transaction report (STR)?
- What measures do you need to take to enable your submission of STRs to FINTRAC?
- What are reasonable grounds to suspect (RGS)?
- When do you submit an STR to FINTRAC?
- How does FINTRAC assess your compliance with the obligation to submit STRs?
- How can you assess your own compliance with the obligation to submit STRs?
Read the full guidance here