How FINTRAC builds a case

The link chart of a money laundering case, with details changed or deleted for security and privacy reasons, demonstrates what FINTRAC includes in a case disclosure to law enforcement. The chart illustrates how complex and tangled money laundering schemes can be.

In this case, a foreign financial intelligence unit detected suspected money laundering activity linked to an import/export business and advised FINTRAC. Through analysis of transactions and other sources of information, we were able to uncover and link three separate clusters of suspicious financial transactions into a larger financial network. The more we kept digging, the more elaborate the scheme appeared. These separate financial clusters can be found on the chart and are identified in Boxes A, B and C.

FINTRAC sanitized money laundering case

Total value of transactions $21,207,688.48 USD and $2,269,231.73 CAD

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Box A

A foreign financial intelligence unit (FIU) advised FINTRAC of a money laundering investigation of two individuals, and a business involved in the wiring of funds between accounts, within the same financial institution located in their own country. The individuals provided Canadian addresses and identification and were described as Canadian by the foreign FIU.

The foreign FIU reported that the business—referred to in the chart as Company 1 in Box A—would wire funds through several foreign reporting entities to an account at a financial institution in their country. Two Canadians held power of attorney over this account. The funds would then be further transferred to another account at the same financial institution. This account was held by the two individuals identified by the foreign FIU as Canadian. The foreign FIU deemed this whole activity suspicious. No other information could be found by the foreign FIU regarding Company 1.

After receiving the information from the foreign FIU, FINTRAC searched our database.  We found reports of financial activity involving the two individuals. We also found transactions involving Company 1, the company identified by the foreign FIU.

According to the transactions in our database, Company 1 wired several millions of dollars to multiple companies in Canada. As shown in Box A and Box B, Company 1 wired funds to Companies 2, 3, 4, and to multiple other companies, all located in Canada. One of the principal recipients of these electronic funds transfers was a business located in Canada, noted on the chart as Company 4 in Box B.

Box B

A search of open sources yielded very little information on Company 1, and nothing on Company 4. These searches were conducted to obtain contextual information on the nature of these businesses, and to assess what might be the underlying business relationship or rationale for these transactions.

We found no open source information on Company 4 in the way of advertising, telephone directory information, or a company website. However, we were able to confirm that this company was incorporated in Canada.

As a result of our analysis of the financial transactions involving Company 4, we found a suspicious transaction report filed by a Canadian financial institution. The reporting institution reported to FINTRAC activity it deemed suspicious with regard to the business accounts held by Company 4. The reporting entity stated:

• The company was an import/export business
• The accounts were opened several years ago and were relatively dormant
• The dollar value of wire transfers received into the two business accounts were steadily increasing
• Over a short period, millions of dollars were wired to the accounts held by this business with no rationale as to why the increase occurred
• The number of wires received from various foreign companies originated from a country with weak anti-money laundering controls

As a result of the information provided by the reporting entity, we conducted further research on the potential business relationship between Company 1 and Company 4, now identified as an import/export business.  We found that Company 1 was not in the business of purchasing or selling the product it purported to, nor to anything remotely associated with that industry. Therefore, the level of financial activity conducted between Company 1 and Company 4 was suspect and required further attention.

Through further analysis, we also found two other companies operating at the same address as Company 4.  They are Companies 5 and 6 and they form part of the second cluster of financial transactions found in Box B.  In fact, when an address for one business changed, so did the addresses for the other businesses. The addresses for these three companies changed three times over a four-year period.

Wire transfers received by Company 5 were received from the same foreign country with weak anti-money laundering controls. We found that Company 5 and Company 6 shared the same director.

Company 7, located in the center of the chart, is the financial link between the three clusters of financial activity making up the larger network.

Company 7 sent wire transfers to Company 4. Company 7 also sent wire transfers to an account held by two individuals in Canada. Company 7 sent wire transfers to Company 2, which was also a recipient of wire transfers from Company 1.

Box C

Following a search of our transactional database on Company 7, we found a suspicious transaction report filed by another Canadian reporting entity on the two individuals in Canada identified in the lower right corner of the chart in Box C. The STR was submitted as a result of the suspicions raised regarding the activity of the accounts held by the two individuals. The reporting entity stated that:

Over a period of five months, the two individuals received fourteen wire transfers from four different companies, Company 7 being one of them. Attempts were made to contact the individuals, but their mail was returned and the phone number provided was incorrect. The reporting entity wanted to question the couple regarding the recent financial activity involving their accounts. The reporting entity refused the receipt of several wire transfers for the couple. As a result, one of the Canadians appeared at the reporting entity and claimed that the funds were owed to him from his business overseas.

When asked about the wires received from the various foreign companies, he did not know the companies or why they were sending the payments. It is unusual for a customer to receive funds from multiple businesses and not be able to identify the businesses or why funds were being sent. It is also unusual for a new customer not to come to the financial institution over a seven-month period.

We also received voluntary information from a Canadian law enforcement agency on the two individuals in Canada. It was suspected that they were using their personal accounts to launder the proceeds of crime.