Canada's financial intelligence agency says it anticipates that criminals will increase their use of cryptocurrency to raise, move and hide funds outside the traditional banking system.
In its latest annual report, released Monday, the Financial Transactions and Reports Analysis Centre of Canada highlights its development of strategic intelligence on the role virtual assets play in money laundering and terrorist financing.
The agency, known as Fintrac, says the most prevalent form of money laundering involving virtual currencies is the movement of proceeds of fraud and ransomware attacks.
Fintrac identifies money linked to illicit activities by electronically sifting millions of pieces of information each year from banks, insurance companies, money services businesses, securities dealers, real-estate brokers, casinos and others.
In turn, it discloses intelligence to police and other law-enforcement agencies about the suspected cases.
"Fintrac continues to operate in a challenging environment with new and evolving technologies and financial products, rapidly shifting global financial systems and geopolitical events constantly shaping our work," agency director Sarah Paquet says in the report.
Businesses that exchange foreign currencies, transfer money, cash or sell money orders or traveller's cheques, or deal in virtual currency are required to register with Fintrac before offering these services to the public.
Fintrac warns that the use of unregistered money services businesses continues to pose challenges for those seeking to detect money laundering and terrorist financing through traditional financial channels.
In May 2022, Fintrac published an advisory to help businesses and the general public protect themselves against illicit activities tied to underground banking.
The advisory spelled out key attributes of underground banking in Canada, particularly through unregistered money services businesses in metropolitan Vancouver, the Greater Toronto Area, and, to some extent, in the Calgary-Edmonton corridor.
Fintrac says it has since seen an increase in reporting on money laundering associated with underground banking, as well as the identification of individuals and entities suspected to be operating unregistered money services businesses.
"Suspicious transactions reported to Fintrac have highlighted the significant role of third-party intermediaries, such as professional money launderers and money mules, in facilitating underground banking and the laundering of criminal proceeds," the report says.
Underground banking through unregistered money services businesses continues to be attractive to international figures looking to evade sanctions or engage in other types of illegal activity, such as terrorist financing, the report adds.
This report by The Canadian Press was first published Dec. 4, 2023.
Jim Bronskill, The Canadian Press
