Money Laundering and Terrorist Financing Trends in FINTRAC Cases Disclosed Between 2007 and 2011

Common Characteristics of Suspected ML Drug Cases

Typical schemeFootnote 1

Tony, age 35, had worked at his family’s car dealership (which his father owned) since he was young. After working there for several years, and having sold cars to numerous people, he also started to get to know members of the local organized crime group. They would often walk into the dealership with bags full of cash and purchase the latest flashy car. Tony was happy, as the commission he made was great. Then they started asking him for favours. They told him that they would give him a bag of cash which would “buy” a car, but the car would actually just sit there on the dealership lot. Six months later, they would return to “sell” the car back and pick up a cheque from the dealer – after paying Tony’s commission. This is how Tony, unbeknownst to his father, became the “banker” of choice for this organized crime group.

The banks started to suspect something when Tony started to deposit large amounts of cash on a regular basis. He told them it was from the sale of vehicles; however, bank staff knew how unusual it was for someone working for a car dealership to walk in with a bag of cash (and for it to come from a legitimate source). Tony started to ask his wife to deposit cash in order to draw less suspicion to himself. He figured that if they split the deposits between themselves under the $10,000 reporting threshold, the bank wouldn’t be suspicious. However, the banks quickly picked up on this trend, linking Tony and his wife to the same address on file, and submitted multiple STRs to FINTRAC regarding the couple.

At some point, the police were tipped off that Tony was providing money laundering services for an organized crime group. In order to gather more intelligence, the police informed FINTRAC of their suspicions through a VIR and FINTRAC quickly made an ML disclosure to the police force. After finalizing their investigation, the police charged Tony, who was eventually sentenced to jail for money laundering.

Characteristics of individuals suspected of ML related to drug offences

Based on a review of a sample of 2010-11 ML case disclosures related to suspected drug offences, the following characteristics were noted:

ML methods and techniques observed in suspected drug-related cases

Structuring and smurfing

Refining

Commingling

Casinos

Electronic funds transfers

Foreign exchange transactions

Types of businesses used in suspected drug-related cases

Over the past four years, 68% of drug-related cases consistently involved at least one business that was not necessarily a cash-based business. Examples of businesses and sectors observed in drug-related cases were:

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Return to footnote 1The details of the scheme represented here are not taken from one particular case disclosure; rather, they are based on observations made in a number of similar cases.

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