FINTRAC Publishes New Operational Alert to Help Businesses Identify Terrorist Activity Financing Indicators

On December 15, 2022, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) published an Operational Alert that lists terrorist activity financing indicators concerning domestic and international terrorist groups. Specifically aimed at businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), FINTRAC issued the indicators to help firms identify and report suspicious transactions and terrorist property. 

According to the alert, the Government of Canada states that religiously motivated violent extremism (RMVE), politically motivated violent extremism (PMVE), and ideologically motivated violent extremism (IMVE) all represent a threat to the security of Canada. IMVE is identified in the report as a type of terrorist threat that has “killed and wounded more people on Canadian soil than RMVE or PMVE.” 

Indicators of Terrorist Financing Activity 

To identify the terrorist financing activity, FINTRAC analyzed a sample of suspicious transaction reports (STRs) it received between January 2019 and October 2022. Based on FINTRAC’s analysis, the reported transactions fell into three main categories, including domestic terrorism, financing international terrorist groups, and Canadian extremist travelers (CETs).

In light of its analysis, FINTRAC compiled a comprehensive list of terrorist activity financing indicators that occur across each category, including:

• Adverse media or law enforcement information that link individuals to violent extremist group(s), sentiments, or violent extremist activity
• Subjects involved in transactions with individuals, groups, clubs, businesses and/or charities who have been associated with violent extremist groups by the media or law enforcement
• Transactions that involve certain high-risk jurisdictions
• Transaction details (contact name, email address, funds totals, remittance info, etc.) that make references to words, phrases and/or numbers linked to violent extremist actors, groups, activity, or iconography
• Excessive email money transfers followed by the depletion of funds through third parties or cash withdrawals
• Transactions that involve persons or entities identified by media and/or sanctions lists as being linked to a terrorist group or terrorist activities
• The use of crowdfunding, FinTech platforms, and/or cryptocurrencies to finance individuals or groups associated with violent extremism

For additional indicators of terrorist activity financing about CETs, compliance teams should review FINTRAC’s 2018 Terrorist Financing Assessment, as the report notes these indicators continue to be commonly observed.

Draft Guidance: Reporting STRs to FINTRAC

On December 16, 2022, FINTRAC also issued draft guidance for entities obligated to submit suspicious transaction reports (STRs) under the PCMLTFA. While the guidance may still undergo minor changes before coming into effect in September 2023, it highlights the changes due to be made to the STR form – a mock-up of which can be found here. 

FINTRAC reminds reporting entities that they must submit an STR to FINTRAC as soon as possible after measures have been taken to establish “reasonable grounds to suspect” the transaction is related to money laundering or terrorist financing. According to the guidance, the following measures should be taken to establish reasonable grounds for suspicion: 

• Screening for and identifying suspicious transactions
• Assessing the facts and context surrounding the suspicious transaction
• Linking risk indicators to your assessment of the facts and context
• Explaining your grounds for suspicion in an STR, where you articulate how the facts, context, and risk indicators allowed you to reach your grounds for suspicion

When completing an STR, FINTRAC states that a “fact” is an event, action, occurrence, or element that exists or is known to have happened or existed. Facts known to a reporting entity could include account details, a client’s financial history, particular business lines, or information about a person or entity. 

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