Front companies used for illegal cannabis cash laundering: intelligence agencies

Jim Bronskill, Canadian Press

Published on Wednesday, September 28, 2022 5:30AM EDT

A range of companies, from food wholesalers to electronics repair services, are being used to disguise the proceeds of illegal cannabis businesses, according to Canada’s Financial Intelligence Agency.

Canada’s Financial Transactions and Reports Analysis Center, known as Fintrac, alerts cash-handling banks and others to various clues that the transactions are related to black market pot trading in a new operational alert. I am warning you.

Canada legalized recreational cannabis four years ago and set a legal framework for the manufacture, sale and possession of cannabis.

However, 37% of respondents to the federal government’s 2021 cannabis survey said they obtained some or all of their cannabis from illegal or unlicensed sources.

Fintrac says the illegal cannabis market denies significant tax revenue from public funds, while tens of millions of dollars in profits are used by organized crime groups to fund other illegal and harmful activities. said that

“When you buy cannabis illegally online, you are actually funding organized crime,” said Barry MacKillop, Deputy Director of Intelligence at Fintrac.

Criminal groups disguise the money and use it to buy cocaine and guns, traffic people, exploit children and acquire real estate, he said.

As a result, whether Canadians know or not, they are funding other criminal activities in their communities.

Fintrac worked with law enforcement and major Canadian banks to create operational warnings to move Project Legion forward. A public-private partnership led by Toronto-Dominion Bank, the project aims to raise awareness of the harm associated with shady cannabis trade and better detect revenue laundering.

Fintrac seeks to uncover evidence of money laundering and terrorist financing by sifting through suspicious transaction reports from over 24,000 businesses, from banks and money transfer services to real estate brokers and casinos. They then pass the resulting financial information on to police and security agencies.

Fintrac also uses analytical techniques to help identify emerging trends and tactics.

The agency analyzed a sample of approximately 5,000 suspicious transaction reports received between March 2020 and March 2021 related to illegal cannabis activity. Most of these involved the alleged sale and distribution of pot from unlicensed online pharmacies, but some were related to possible illegal weed production.

Front companies most frequently used for revenue cleaning include e-commerce companies in the beauty and wellness industry, food and beverage wholesalers, automotive companies, electronics repair services, construction companies, and marketing, advertising and consulting companies. companies were included.

“In many cases, accounts held by these front companies had little or no business-related transactions. and owned by other members of the network,” the operational alert said.

“Many of these individuals owned multiple businesses and were transferring funds between business accounts, personal accounts, and accounts of related parties without a clear purpose.”

The analysis yielded several indicators, or red flags, that could suggest that cannabis laundering is underway. Fintrac notes that while a single metric may not seem suspicious at first, it may prompt us to look at other facts, contextual factors, or additional metrics that may raise concern. I am warning you.

Indicators related to illegal pot growing, processing, and preparation include bulk purchases at hydroponic retail outlets, and unusual public practices such as multiple individuals paying from the same hydropower account and cash payments over the counter. Includes payment of fees.

Among the indicators related to online unlicensed cannabis dispensaries:

— A client receives numerous email transfers from seemingly unrelated third parties.

— Transaction details refer to terms such as weeds, pots, buds, or leaves.

— A large number of purchases in the packaging, shipping, or mail services industry.When

— Wholesale purchase of humidity-controlled packages from specialist suppliers.

In some cases, a network of numbered companies operated potential pass-through accounts for unlicensed pharmacies, the warning said. Although these entities were listed in very different industries, they were linked through financial flows, shared e-money transfer contact information, or the same approved signatories.

The COVID-19 pandemic has accelerated this phenomenon to some extent because “everybody was buying everything online when things were shut down,” MacKillop said. “And this was another way organized crime exploited it and used its online presence to sell illegal cannabis.”

This report by the Canadian Press was first published on September 28, 2022.

Front companies used for illegal cannabis cash laundering: intelligence agencies

Source link Front companies used for illegal cannabis cash laundering: intelligence agencies

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