Examination of a money laundering case brought to light by our analysis team. (Transcript)
Money laundering by organized criminal groups is a serious offence that can take years to investigate and prosecute successfully.
Hiding the profits from drug trafficking and fraud can often involve many individuals and shell companies moving the funds through
a series of complex transactions.
Shedding light on this money trail is the unique contribution of FINTRAC, Canada's financial
intelligence unit, in the fight against organized crime. Working with banks, credit unions, casinos, and other business sectors
FINTRAC collects reports on millions of financial transactions each month. We then analyze this information to detect patterns and
links that might otherwise go unnoticed. We do it by the numbers and follow the money where it leads.
In this video we will share a money laundering case brought to light by our analysis team. Working with Suspicious Transaction
Reports provided by financial institutions and information submitted by law enforcement, FINTRAC was able to follow the money trail,
linking seven individuals and four businesses in a suspected criminal network involving 800 individual transactions worth more than
Once the financial picture became clear, FINTRAC was able to provide law enforcement with valuable information, allowing
them to focus their investigation and identify suspects previously unknown to them.
Here is a reconstruction of the events that led to FINTRAC's case disclosure.
This case concerns a group of individuals and several
companies both in Canada and offshore. The suspected criminal activity is the laundering of over $12 million in Canadian funds - money
suspected to be the income from drug trafficking over a two and a half-year period.
In early 2002, a number of suspicious transaction
reports began to appear on FINTRAC's system, from two branches of the same financial institution. This activity was attributed to
Subject A. Deposits were made to a joint account shared with Subject B, and multiple bank drafts then moved the money to Company 1.
Female Bank Employee
"The client has been coming into the branch two or three times a month and always deposits large amounts of cash, usually all in
$20's. The customer seems nervous when we ask about the source of funds, and always provides similar answers – the money was from
the sale of household items, from the sale of a car, and other things like that. This customer reports her occupation as a homemaker.
We find this activity suspicious."
Later in 2002, similar suspicious transaction reports linked to the same depositor and payees were submitted, from different
reporting entities and different branches. Some referred to the cash deposit activity conducted by A or B, and others referred to
bank drafts purchased in the name of Company 1. During this period, we were able to ascertain the true relationship between Subject A
and Subject B, that they were married.
Female Bank Employee
"Over the past several months, both clients have been regularly depositing cash. The deposits occur two to three times a week, and then
Subject B purchases a draft in the name of Company 1. When asked about this activity, Subject B explained that he sells a variety of
items for his wife's brother, the Director of Company 1. However, our records indicate employment with Company 2."
With this, we confirmed that Subject B was an employee of Company 2.
As our work gained momentum, we identified a third and fourth
reporting entity involved, and searches against our database showed electronic funds transfers ordered by Company 1 for the benefit of
Company 3, located in a foreign country.
We looked more closely at Company 1, and identified Subject C, who had been previously convicted
of drug trafficking-related charges in a foreign country. According to publicly available information, this individual was listed as a
Director of both Company 1 and Company 3. Through information contained in a suspicious transaction report, we identified Subject C as
the brother of Subject A.
We then discovered that a business account, held by a gas and convenience store located in the same city in
Canada as Subjects A and B, was receiving bank drafts from the same joint account that had been sending money to Company 2. Our analysis
then focused on searching for information related to the activities of this joint account.
A new party, Subject G, was identified through
publicly available information as the Director of the gas bar and convenience store.
At this point, voluntary information was
submitted to FINTRAC by Law Enforcement Agency 1.
Male Police Official
"We are currently conducting an ongoing money laundering investigation relating to Subject G, and are herewith providing identification
of the person and the suspected offences being investigated at this time."
Information shared by the law enforcement agency identified that Subject G was thought to be a member of an East Asian Organized
Crime group and was suspected of trafficking narcotics and laundering the proceeds of this criminal activity.
At FINTRAC, our analysts were also uncovering additional key financial information:
- bank drafts made out to the gas bar from the same joint account that had been sending electronic funds transfers to Company 3;
- a number of bank drafts made out to the same institution from a personal account; and
- suspicious transactions reported from a casino.
"Subject G often attends the casino with Subject E or F. They buy in at the cage then go to separate gaming areas. We've seen them
meet up several times throughout a short stay, and one or all will often cash out for large amounts of money, even though they don't
seem to be doing much gaming. We find this very suspicious and will continue to monitor these players."
Through the suspicious transaction report submitted by the casino, FINTRAC focused on the newly-identified Subject D and Subject E,
tying Subject D back through publicly available information on the website of Company 2. Our database showed he was the holder of
the bank account that had been purchasing bank drafts for the gas bar and convenience store of which Subject G was a Director, and one
of the account holders that had been ordering electronic funds transfers for the offshore company, Company 3.
Focus on Subject E showed
that Subject F, also identified by the Casino, had made cash deposits to an account held by Company 3, along with multiple bank drafts
from his personal account to a joint account for which he was one of the account holders.
The pattern, and all its layers and complexities was now eminently clear. We then transmitted the financial details to the law
enforcement agencies in Canada and to a financial intelligence unit overseas to assist the investigation.
This case included some 800 transactions, some reported to FINTRAC as suspicious, other as large cash or electronic funds
transactions. These reports along with publicly available records, and Voluntary Information from law enforcement allowed the links to
be made and the criminal network to be seen.
In this instance, the money laundering case involved drugs and organized crime.
This is just one of hundreds of successfully-concluded
analyses that have been performed by FINTRAC – but it is essential to remember that FINTRAC can only build its financial case when
transactions are reported. In this case, reports of suspicious transactions helped uncover the connections between the players. The value
of this information – from banks and other financial institutions, from real estate agents, money services businesses, casinos, and other
entities is enormous.
Each suspicious transaction report matters and each one receives FINTRAC's attention. For more information about
FINTRAC, visit our website at https://fintrac-canafe.canada.ca.