The AML Shop's expert AML Advisor Adam Feldman is here to update the Real Estate industry with some important news regarding FINTRAC's view of Business Relationships between brokerages, agents, developers and their clients.
Watch the AML Shop Quick Hit video below and learn about this vital update for the Canadian Real Estate Industry.
Listen to the latest episode of the SSI Orbit Podcast via northernblock.io, featuring The AML Shop’s Chief Identity Officer Eugenio DiMira.
This podcast episode discusses the hot topic of Financial Crimes and Digital Identity and addresses the following questions:
What’s the global impact of money laundering today?
How can Digital ID help prevent illicit financial flows?
How can technology (e.g., device fingerprinting) make anti-money laundering and counter terrorist financing efforts faster, cheaper and more efficient?
What is the Financial Action Task Force’s (FATF) Digital ID guidance?
How can you layer multiple sources of identity (outside of government sources) to enhance Identification Assurance?
How can you prevent money laundering through stronger Legal Entity Identity verifications?
Can Open Banking succeed without Digital Identity? Are open banking and digital identity the same thing?
What are some of the key Open Banking standards bodies that are active today?
Does Open Banking make money laundering easier or more difficult?
The AML Shop client “Reyts Fintech Inc” has won the prestigious 1st place prize for top Black-led Startup at the 2022 DMZ Black Innovation Summit, a Ryerson-led program and a world-leading incubator for tech startups around the world.
The 2nd annual Black Innovation Summit provided an opportunity for 8 Black-led startups to pitch to a panel of judges to secure grant-funding for their business.
We at The AML shop want to wish Reyts Fintech congratulations on this well deserved honour!
Read more about Reyts Fintech Inc. and the DMZ Black Innovation Summit via the buttons below.
Global News has released a feature titled Over $154M tied to detained Chinese-Canadian oligarch invested in GTA real estate. This feature examines the financial footprint of Xiao Jianhua and features comments from The AML Shop’s Matt McGuire.
This informative piece discusses various AML related touch-points and in particular, how corporations in Canada can be established and leveraged for real estate transactions using foreign funds that might be subject to Canada’s proceeds of crime and terrorist financing act.
Click the button below to read this engaging feature and watch a video clip where Matt shares his insights on this this topic.
Global Affairs Canada has released an update on additional measures taken on Russia in response to Russia’s attack on Ukraine. This publication includes a list of new and expanding sanctions against specific individuals and entities.
The sanctions include:
Stringent prohibitions on persons in Canada, and Canadians outside of Canada from engaging in any activity related to any property of these listed persons or providing financing or related services to them.
Prohibitions on the purchasing, or facilitating the purchase of Russian sovereign debt.
Specific Prohibitions are set out in the regulations and can be read at the below links:
Regulations Amending the Special Economic Measures (Ukraine) Regulations (SOR/2022-0028)
Regulations Amending the Special Economic Measures (Ukraine) Regulations (SOR/2022-0030)
Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2022-0027)
Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2022-0029)
On February 22nd, Matt McGuire (Practice Leader and Co-Founder the AML Shop) was a guest on the iHeartRADIO Evan Solomon Show to discuss potential implications relating to financial institutions freezing bank accounts of individuals linked to convoy protests.
Listen to Matt’s comments on this subject at the link below, at the 23:00 minute mark.
What are the red flags raised by powers enacted under the Emergencies Act?
Watch Matt McGuire (The AML Shop Co-Founder and Practice Leader) discuss this hot topic with the Press Gallery and Evan Solomon on CTV's Power Play Overtime discussion.
Watch this segment during the February 21st episode, at the 29:48 minute mark by clicking the button below.
Matt McGuire Practice Leader and Co-Founder of The AML Shop has been invited by several media outlets to comment on the Emergencies Act, invoked on February 14th, 2022.
Read the below press features to learn more.
The RCMP has published a list of cryptocurrency addresses they associated with the blockade, pursuant to the Emergencies Act measures.
On February 14, 2022, the federal government invoked the Emergencies Act, that broadens the scope of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and sets out new obligations to financial institutions and service providers.
The regulations to achieve those means were included in the Emergency Economic Measures Order (Order) released on February 15, 2022. Our summary and interpretation of that Order is as follows:
There is an immediate order in place for financial institutions, insurance companies, trust and loan companies, money services businesses, crowdfunding platforms and/or payment service providers to continuously determine whether they are in control or possession of property by a designated person.
Click the button below to read the Initial Perspectives on the Emergencies Act from the experts at The AML Shop.
Additionally, The RCMP has published a list of cryptocurrency addresses they associated with the blockade, pursuant to the Emergencies Act measures.
The Canada Gazette has released the Emergencies Act Regulations. Click on the button below to read the official document.
The AML Shop will be staying on top of the regulatory considerations and publishing updates to help our readers navigate the changing environment. Follow us on Linkedin to get the latest updates.
The Emergencies Act was announced on February 14th, 2022.
Click the button below to read the official Remarks by the Deputy Prime Minister and Minister of Finance regarding the Emergencies Act.
Via the Department of Finance Canada.
In 2021, FINTRAC updated the guidance in several areas including large virtual currency transaction reporting, the ministerial directive on financial transactions associated with the Islamic Republic of Iran, compliance program requirements, terrorist property reporting, methods to verify the identity of persons and entities, as well as money laundering (ML) and terrorist financing (TF) indicators related to suspicious transaction reporting.
Read Part Five, the final post of a five-part weekly series by The AML Shop’s Sonia Yooshing (Program Content Specialist) that takes a deep dive into each of the changes that FINTRAC has made to its guidance on suspicious transaction reporting and the glossary. The previous, Part Four, focused on reporting terrorist property to FINTRAC and the methods to verify the identity of persons and entities. Part Three outlined the updates related to compliance program requirements. Part Two outlined the updates related to the ministerial directive on financial transactions associated with the Islamic Republic of Iran. Part One discussed changes to the guidance on LVCT reporting.
Matt McGuire (Practice Leader, The AML Shop) recently provided his expert insights to Global News concerning Canada’s hot real estate market and the decrease in money laundering audits in the industry for the feature “As Canada’s home prices soared during Covid-19, real estate money laundering audits fell 64%”.
This illuminating piece provides rarely heard insider perspectives on how the real estate industry and AML intersect; ultimately affecting the general public and Canada’s housing market.
On February 10th, 2022, at 2:00pm EST, The AML shop in partnership with industry Cybersecurity experts Valencia Risk, will deliver an awareness session on ransomware breach response and readiness.
Valencia Managing Director and 25-year cybersecurity expert Aron Feuer will be joined by Richard McDonald, former CIO of CSIS and CSE, and Matt McGuire, Practice Leader of The AML Shop.
Webinar Description:
When an attack hits, executives must act quickly. Data shows that in the case of a ransomware breach, Canadian organizations are coming in cold, navigating uncharted waters with untested tools and playbooks. This session will describe the importance of being prepared for an attack through sharing the experience of a ransomware outbreak - from initial breach to recovery.
Attendees will learn:
• What to expect from their cyber-insurance provider, MSSP, and tech partners
• When to act fast, and how to make informed decisions during a breach
• What to consider and common steps involved in paying ransoms (and trying to recover them)
• How to interact with prudential, privacy and law enforcement/money laundering authorities throughout the incident
• Steps to take when a client of your financial institution or crypto exchange seeks to pay a ransom
• What to measure for Cybersecurity health
• Why a cybersecurity audit or assessment isn’t the best tool
• Protecting yourself when you work from home
• Recovering from a breach post-incident
Register today! Spots are limited.
About Aron Feuer, Managing Director of Valencia IIP
Aron is the managing director of cybersecurity at Valencia. Before Valencia Aron founded Cygnos IT Security as head hacker, and sold the firm to Grant Thornton in 2015. Valencia IIP specializes in cybersecurity, privacy, and cloud. Aron’s work is with the federal government, cities, provinces, fortune firms, national retailers. He’s responded to hacks by Anonymous, lead classified security projects for the government, and run hundreds of penetration tests, risk assessments, simulations and security incident responses. His certifications include CISSP, CISA, CRISC, CRMA, CDPSE and CIPP/C, MCSE
About Matt McGuire, Practice Leader at The AML Shop
Matt is the Co-Founder and Practice Leader of the AML shop. He is an internationally recognized expert in anti-money laundering (AML) and counter-terrorist financing (CTF). He has been assisting financial institutions to assess and reduce financial crime and related regulatory risks for fifteen years. He has served as an advisor to the UN as well as Canadian and foreign governments on development of their laws and financial intelligence functions.
Matthew has been qualified by the Ontario Superior Court of Justice as an expert witness in forensic accounting and money laundering (ML), prepared expert reports in respect of money laundering and frauds related to cryptocurrency, lawyers, financial institutions and in respect of immigration cases, and has twice testified before the Cullen Commission, Senate committees, twice before a House of Commons Parliamentary Committee (ML/TF). His certifications include FCPA, FCC, CFF, CAMS, AMLP, and CCI.
In the anti-money laundering (AML) and counter-terrorist financing (CFT) context, the term “typologies” refers to the various techniques used to launder money or finance terrorism. Learning how organized plans (i.e., schemes) used by criminals for something illegal will help compliance professionals fight money laundering and terrorist financing effectively.
Some infamous money laundering related schemes would be dating back to old time, here are a couple of classical ones.
Hawala Money Laundering
In a basic form of Hawala Money Laundering, it works by transferring money without actually moving it. In fact, money transfer without money movement is a definition of hawala that was used, successfully, in a hawala money laundering case.
Lazy Susans/Round-tripping Scheme
"Lazy Susans" is also known as round-trip transactions. Round-tripping transactions generally refer to a series of transactions that involve circulation of money across persons, organizations, or jurisdictions (typically with weaker AML controls) culminating in its return to the person/organization and the jurisdiction of origin giving the impression that the funds have derived from a clean source.
And some money laundering schemes occurred recently may not be really “new” but with new tags labelled by media or professionals. Here are few money laundering schemes with “new” labels.
Snow-washing
Snow-washing was coined by Canadian newspaper The Toronto Star to describe the flow of dirty money entering the Canadian economy for the purposes of tax evasion or terrorist financing, and the term is now being used internationally. The term is a mixture of the words snow meaning purity as well as the cold Canadian climate and washing referring to money laundering.
Vancouver Model
In the past, there were many money laundering schemes named after some countries. But the “Vancouver Model” might be the first money laundering scheme named after a city. The model (highly used in Vancouver, British Columbia, Canada) uses casino gambling as a way for foreign and domestic criminals to launder illegitimate funds and exploits Canada’s traditionally lax regulatory approach to financial crime.
Cuckoo Smurfing
According to Australian Transaction Reports and Analysis Centre (AUSTRAC), organised criminals use “cuckoo smurfing” as a method of laundering money to disguise and integrate their funds across borders to profit from and further enable their illegal activities. Generally, this method of money laundering relies on exploiting the accounts of customers expecting to receive legitimate funds. These customers are often unaware that the funds transferred into their accounts are the proceeds of crime.
Money launderers and supporters of terrorism have demonstrated creativity in combining traditional money laundering techniques into complex money laundering schemes to avoid criminal prosecution while still spending their ill-gotten gains. Understanding Organized criminals and behaviours could enable compliance professionals to win the fight against financial crimes.
Take the “Vancouver Model” as an example, funds were deposited to the banks in one jurisdiction and cash paid out in another jurisdiction. Or cash was loaned out (often secured against real estate owned in Vancouver) in the scheme. Using the bundles of cash is one of the characteristics of the “Vancouver Model”, therefore cash related activity monitoring is an area that the AML/CFT detection technology should focus on. Of course, to detect the unregistered remitters/loan lenders who route funds is critical as well.
Take the “cuckoo smurfing” as another example, AUSTRAC provided the detailed guide for fighting organized criminals/professional money launderers who use the “cuckoo smurfing”:
· Bad actors - organized criminals/professional money launderers (criminal syndicates), and corrupt remittance service providers
· Common steps of “cuckoo smurfing” which may have different paths that could involve financial institutions in multiple countries:
o A (sending) customer deposits legitimate funds with a remitter to send to a beneficiary (receiving) customer (based in Australia).
o The remitter is corrupt and facilitating money laundering on behalf of a criminal syndicate. The corrupt remittance business does not send the money to the beneficiary.
o The corrupt remittance business gives details of the transfers, including the amount of funds and the beneficiary’s account (also known as the “cuckoo’s nest”) details, to the professional money laundering syndicate.
o The professional money laundering syndicate employs smurfs (in Australia) who meet up with criminals to collect the equivalent transfer amount in cash.
o The smurfs deposit the cash into the “cuckoo’s nest”.
o The deposits are often made by smurfs in amounts less the regulatory reporting threshold (structuring).
o Once funds have been deposited in the beneficiary’s account, the corrupt remittance business gives the legitimate funds received from the customer to the criminal syndicate.
Hence, for the “cuckoo smurfing” scheme, the AML/CFT detection technology should focus on multiple detection scenarios, such as smurf or third-party agent, structuring, offsetting and etc.
How can the AML Shop ("TAS") help?
The AML Shop is well-positioned for helping clients about launder money or finance terrorism typologies and schemes. View our list of amazing TAS advisors for more information here.
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The information provided in this document is for general informational purposes only. It is provided in good faith; however, we make no representation or warranty of any kind, express or implied, regarding its accuracy, adequacy, validity, or completeness. Users should seek advice regarding their particular circumstances.
In September 2021, FINTRAC updated the guidance in several areas including large virtual currency transaction reporting, the ministerial directive on financial transactions associated with the Islamic Republic of Iran, compliance program requirements, terrorist property reporting, methods to verify the identity of persons and entities, as well as money laundering and terrorist financing indicators related to suspicious transaction reporting.
Read Part Four of a five-part series by The AML Shop’s Sonia Yooshing (Program Content Specialist) that takes a deep dive into each of the changes that FINTRAC has made to its guidance. Part Four focuses on reporting terrorist property to FINTRAC and the methods to verify the identity of persons and entities. The previous Part Three outlined the updates related to compliance program requirements, you can read that post here. Part Two outlined the updates related to the ministerial directive on financial transactions associated with the Islamic Republic of Iran. Part One discussed changes to the guidance on LVCT reporting.
In September 2021, FINTRAC updated the guidance in several areas including large virtual currency transaction reporting, the ministerial directive on financial transactions associated with the Islamic Republic of Iran, compliance program requirements, terrorist property reporting, methods to verify the identity of persons and entities, as well as money laundering and terrorist financing indicators related to suspicious transaction reporting.
Read Part Three of a five-part series by The AML Shop’s Sonia Yooshing (Program Content Specialist) that takes a deep dive into each of the changes that FINTRAC has made to its guidance. Part Two outlined the updates related to the ministerial directive on financial transactions associated with the Islamic Republic of Iran. Part One discussed changes to the guidance on LVCT reporting.
In September 2021, FINTRAC updated the guidance in several areas including large virtual currency transaction (LVCT) reporting, the ministerial directive on financial transactions associated with the Islamic Republic of Iran, compliance program requirements, terrorist property reporting, methods to verify the identity of persons and entities, as well as money laundering and terrorist financing indicators related to suspicious transaction reporting.
Read Part Two of a five-part series by The AML Shop’s Sonia Yooshing (Program Content Specialist) that takes a deep dive into each of the changes that FINTRAC has made to its guidance. Part One discussed changes to the guidance on LVCT reporting, you can read that here.
On June 1, 2021, amendments to certain Regulations made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”) (the “amended Regulations”) came into force. On May 18, 2021, FINTRAC published their Notice on the assessment of amended Regulations, and granted reporting entities forbearance until December 1, 2021, to update their compliance programs and reporting systems and practices. FINTRAC will begin to assess compliance with the amended Regulations as of April 1, 2022.
So, what’s next?
The AML Shop’s Marcelle Dadoun (AML Advisor) insightfully explains what is to come as of December 1st, 2021, in regards to Reporting Obligations, Compliance Program Updates, FINTRAC Examinations, Travel Rule Obligations, and Important Dates to Remember.
Read this important article below.
