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State of Financial Crime 2023 Report

FINTRAC Issues Alert on Money Laundering Indicators Related to Illegal Wildlife Trade

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The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has published an operational alert to help reporting entities recognize suspicious financial transactions related to the illegal wildlife trade (IWT)

Produced in collaboration with members of Project Anton – an international public-private partnership aimed at improving awareness of the global threat posed by IWT – the alert includes a list of money laundering indicators, high-risk factors, and common trends to be applied in a Canadian context. However, FINTRAC notes that many of the indicators could apply to other jurisdictions. 

IWT money laundering indicators

The indicators compiled by FINTRAC come as a result of the regulator’s analysis of approximately 200 Suspicious Transaction Reports (STRs) related to IWT between 2011 and 2022. In these STRs, the primary transaction methods included cash transactions, wire transfers, and email money transfers. 

When dealing with potential cases of IWT, FINTRAC stresses that the following money laundering indicators should not be viewed in isolation, but assessed alongside what is known about a client and other behavioral factors and patterns. These include:

  • Transaction details that refer to species or animal parts of concern for IWT, especially endangered species
  • Adverse media linking the client or transacting parties to IWT  
  • Transaction details specify the role of the beneficiary of funds 
  • An individual is the owner, operator, employee, or associated with an industry that could be used to facilitate IWT 
  • An individual receives numerous transfers with wildlife-trade references from several parties, followed by outgoing transfers to an individual(s) who have also received similar email money transfers 
  • The individual had very few or no other transactions in their account
  • Frequent transfers to individuals and/or entities located in jurisdictions of concern for wildlife crime (e.g., China, Hong Kong, Australia, and Sub-Saharan Africa) 
  • Payments to entities operating in the traditional medicine market
  • The individual or entity received multiple email money transfers or wire transfers referencing species or animal parts of concern for IWT from Canada
  • Frequent purchases or payments for animal-related goods and services 
  • Regular payments to shipping entities, postal services, and/or cargo services
  • Payments received from individuals and/or entities involved in an animal-related business that is inconsistent with the client’s profile 

Businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act should review these red flag indicators in their entirety, ensuring their transaction monitoring and adverse media solutions are calibrated in accordance with their risk profile.

The FATF and IWT

In June 2020, the Financial Action Task Force (FATF) published its first global report on IWT. In it, the FATF advised countries to:

  1. Identify and assess their money laundering risks relating to the IWT
  2. Ensure that national laws and powers for law enforcement allow authorities to go after the finances of wildlife traffickers and pursue financial investigations

The global watchdog has since released additional guidance on money laundering from environmental crime. Issued in July 2021, it highlights the common challenge of how to distinguish between the legal and illegal wildlife trade. To strengthen this risk awareness, the FATF advises collating diverse data from different sources during the customer due diligence (CDD) process.

Still, global concern around environmental crime is continuing to increase. In our 2023 global compliance survey, we asked 800 C-suite and senior compliance decision-makers across the world which predicate offenses were most important to their organizations. More than one in four selected environmental crime, making it the second-highest typology of concern for firms when submitting STRs. This is despite its inclusion in our survey for the first time in 2022.

Key takeaways

In a February 8th webinar exploring financial crime trends in 2023, ComplyAdvantage Regulatory Affairs Practice Lead Alia Mahmud commented on the importance for firms to undertake effective “horizon scanning” when seeking to enhance their controls to detect environmental crimes, such as IWT. Horizon scanning should include keeping abreast of new and upcoming regulatory changes to ensure internal policies and procedures comply with legislation and adequately reflect the risk landscape. Furthermore, firms should take a close look at their governance structures, ensuring those at the top are making the right kind of decisions to stay up to date with regulatory changes. 

Frequent enterprise-wide risk assessments should also be undertaken to assess residual risk exposure. To minimize these risks, compliance teams should consider enhancing their transaction monitoring scenarios and rules to identify suspicious transactions and behavior that could lead to customers and payment methods used to perpetrate IWT.

STR filing guidance

When submitting an STR to FINTRAC, the alert reminds compliance staff to consider the facts, context, and money laundering indicators of a transaction. A mere “hunch” or “gut feeling” is not enough. Reporting entities must reach grounds to suspect a transaction is related to the laundering, or attempted laundering, of illicit funds before they can submit an STR.

To reference this operational alert when filing an STR, FINTRAC requests compliance staff to include the term #ProjectANTON or #ANTON in the Part G-Description field. More information on reporting requirements can be found here.

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Originally published 09 February 2023, updated 10 February 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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