Banks and credit unions in B.C.’s marijuana-growing heartland have reported a disproportionately high number of suspicious transactions, said the agency charged with identifying money laundering in Canada.
The Financial Transactions and Reports Analysis Centre said the higher levels were found “in regions of British Columbia’s interior near Nelson and Fort St. John that have been identified in the media as being home to organized criminal activity.”
The FINTRAC report, released Tuesday, suggested the transactions might be linked to the fact that “the B.C. marijuana trade has been generating annual revenues of approximately $4 billion for at least the past seven years.”
The new study analyzed more than 300,000 suspicious transaction reports sent to FINTRAC since its formation in 2001 to identify trends and patterns. That included more than 54,000 from B.C.
The report broke down the numbers of suspicious transactions per 100,000 people across Canada since 2001 and found that the northeast part of B.C. and the west Kootenay both fell into the highest range, with more than 2,000 suspicious transactions in each region through that period.
No year-by-year breakdown nor specific transaction details were provided for either region in the report.
Sgt. Shinder Kirk, of the Combined Forces Special Enforcement Unit, said it is not surprising that there appear to be areas around the province where suspected money laundering is occurring.
“We can say with some certainty that not only has there been a slow migration of gangs and organized crime to outlying communities, but also the establishment of narcotic production facilities in increasingly remote regions of the province,” Kirk said Tuesday.
Where the drugs go, the profits follow, he said.
Called Trends in Canadian Suspicious Transaction Reporting, the FINTRAC study looked at a decade of reports by banks, credit unions, money service businesses, casinos and other agencies that deal in large amounts of cash.
Suspicious Transaction Reports (STRs) can range from noting large cash deposits, unsourced deposits, multiple deposits, deposits just under the $10,000 reporting threshold or financial transactions involving third parties.
FINTRAC director Jeanne Flemming told a Toronto anti-money laundering conference Tuesday that banks and other financial institutions need more sophistication and variety in their reporting of suspicious transactions.
Flemming said reporting agencies generally do a good job about noting basic transactions that are suspicious. But they are not as good at identifying more complex schemes, involving multiple layers of transactions, by organized crime groups trying to hide their proceeds.
“They are not doing nearly so well when the laundering concerns the layering and integration stages. The layering stage involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail, and the source and ownership of funds. The integration stage involves placing the laundered proceeds back in the economy to create the perception of legitimacy,” Flemming said.
New rules came into force in 2008 that require “reporting entities to expend more effort in identifying their highest money laundering and terrorist financing risks,” Flemming said.
“We hope to see an increase in the level of variety and sophistication in STR reporting in the future. The purpose of this report is to provide strategic financial intelligence feedback to help reporting entities conform to these new obligations,” she said.
Flemming added that FINTRAC is making “a real difference in the fight against money laundering and terrorist financing through the identification and reporting of suspicious transactions.”
Although there were no specific transaction details provided, the report did say that there is often a higher percentage of reports coming from rural areas over major cities.
“In some situations, the high level of STR reporting per capita in rural areas may be partly attributable to employees of reporting entities in rural municipalities having a more personal knowledge of their clients and communities than those in major centres,” the report said. “It may also be due to an increased sense of obligation for those living in smaller communities to make a direct contribution towards protecting their communities from suspected criminal activity.”
Read the full report here:
http://www.fintrac-canafe.gc.ca/publications/typologies/2011-03-eng.asp
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