Fighting terrorism sparked spike in reports of money laundering: report

OTTAWA – Efforts by Canada’s anti-money laundering agency to pinpoint illicit dealings of the Islamic State of Iraq and the Levant and other extremist organizations helped spark an increase in intelligence disclosures to police and spies last year.

The Ottawa-based Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac, passed along 483 pieces of intelligence related to terrorist financing in 2015-16, a 43 per cent increase over the previous year.

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The centre tries to zero in on cash linked to terrorism and money laundering by sifting through millions of pieces of information annually from banks, insurance companies, securities dealers, money service businesses, real estate brokers, casinos and others.

The centre’s annual report, tabled Thursday in Parliament, says Fintrac contributed to international efforts to weaken ISIL’s financing capabilities.

The financial sleuthing agency also focused on ISIL’s affiliates, particularly in relation to how these groups “may be attempting to exploit Canada’s financial system,” the report says.

Overall, Fintrac disclosed 1,655 pieces of intelligence to police and security agencies such as the RCMP and Canadian Security Intelligence Service last year, up from 1,260 in 2014-15.

There was a significant increase in the number of requests from international partners to explore a possible nexus between people in Canada and suspected terrorists elsewhere in the world, Fintrac director Gerald Cossette said in an interview.

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But it’s hard to know definitively whether ISIL has been abusing Canada’s financial institutions, he added.

“It’s impossible to say with confidence what the level of money-laundering could be since it’s an illicit activity and since of course people don’t list themselves as being members of any specific organization,” Cossette said.

“What we know is these groups are operating worldwide, so there is an assumption that the Canadian system is being used by (terrorist organizations).”

Intelligence from Fintrac played a role in the preventive arrest of an Ontario man on a terrorism charge in March.

The federal agency is confronting new challenges including criminal use of mobile payments, alternative banking platforms, peer-to-peer lending and digital currencies.

Cossette said efforts to build relationships with Canada’s major financial institutions have paid off, with an increasing flow of valuable information about suspicious transactions coming to Fintrac.

“It used to go one way, now it’s very much a two-way relationship,” he said. “We talk to them on an ongoing basis. The relationship, I would say, is much richer than it was in the past.”

The agency now plans to focus more intensively on higher-risk sectors, including real estate, money service businesses and dealers in precious metals and stones.

“We’re going through the different sectors, one at a time, trying to reach the same level of partnership we have with the big banks right now.”

Fintrac also wants to get a better sense of how professional money launderers use specialists to hide dirty cash.

“There are people who do that for a living,” Cossette said. “So who are these people, how do they operate, where do they operate, and so on? So that’s a field where there’s still lots of research to be done.”