17 February 2025: FINTRAC Issues New Money Laundering Operational Alert

FINTRAC Issues New Money Laundering Operational Alert

FINTRAC has issued a new Operational Alert to help businesses identify and report financial transactions linked to the laundering of proceeds from illegal synthetic opioids like fentanyl.

The Operational Alert aims to help reporting entities identify financial transactions linked to synthetic opioid trafficking, including fentanyl.

Although the report focuses on the opioid epidemic in North America, the indicators in the report can be used by other jurisdictions to help detect, disrupt and prevent the escalation of synthetic opioid trafficking.

 

The indicators are patterns or anomalies in financial transactions that may suggest suspicious activity. This includes:

  • Large cash deposits or withdrawals that don't match the client's profile;
  • Unusual transaction patterns, such as sudden increases in transaction volume; and
  • Transactions involving high-risk jurisdictions known for drug trafficking or weak AML/CFT systems.

 

It also includes client risk factors, which are characteristics or behaviours that may indicate a higher risk of involvement in illicit activities. This includes clients who:

  • Cannot explain the source of their funds or provide inconsistent information;
  • Act nervous or evasive when questioned about their transactions;
  • Frequently engage in large transactions that are inconsistent with their known income or business activities.

The report highlights an emerging typology whereby “online gambling platforms and associated payment processors are possibly being used to launder proceeds from fentanyl trafficking and production.”

 

The report continues, “As observed in suspicious transaction reports, known fentanyl traffickers frequently sent funds received from multiple incoming email money transfers to gambling sites and received payments in return from associated payment processors based in Malta, Canada and the United Kingdom. It is suspected that individuals are depositing and withdrawing funds at online casinos, using these platforms to disguise proceeds from fentanyl and opioid trafficking as wagers and winnings from online gambling.”

 

The GSC would like to highlight the importance of the following key messages for Operators:

 

Know Your Customer (KYC) and understanding client behaviour

Be vigilant about unusual or suspicious behaviour patterns, such as reluctance to provide identification or information. Ensure enhanced customer due diligence is sought in line with the Code.

 

Monitor transaction patterns

Pay attention to large or frequent transactions inconsistent with the client's known profile or financial status. Look for sudden changes in account activity, such as significant increases in deposit sizes or frequent deposits.

Ensure that a risk-based approach is taken when monitoring transactions.

 

Report suspicious activities to the FIU

Robust reporting procedures must be in place, both in respect of internal reporting to the MLRO and external reporting to the Isle of Man Financial Intelligence Unit (FIU).

 

Dare to Share

The Financial Action Task Force (FATF) noted in their report “Money Laundering  from Fentanyl and  Synthetic Opioids” that  “Financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) are an important source of information to Financial Intelligence Units (FIUs) about drug trafficking and associated money laundering, largely through the filing of suspicious transaction reports (STRs).”

Sharing Suspicious Activity/Transaction Reports (SARs/STRs) with the Isle of Man Financial Intelligence Unit can lead to the detection, disruption and prevention of many types of serious criminality, not just financial crime.

Both the FATF Report and FINTRAC Operation Alert underscore the importance of collaboration and information-sharing between public and private sectors.

 

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