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Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091CISBC-YT Money Laundering Collection Initiative (2018)Date: 2018-05-03Revision: 2.0V1ContextIn July 2017, CISBC/YT Analytics Manager, Ryland WELLWOOD, assigned V1to the Money Laundering Portfolio. The intent was to develop the MoneyLaundering Portfolio including developing a contact list of experts and creating strategicassessment reports on the involvement of organized crime in money laundering in BC and YT.Money Laundering: Topics and PrioritiesIn March, 2018, PTA lead, V1, tasked V1to provide a list of topics thatrelated to the money laundering criminal market portfolio (relating to threat and OCinvolvement),including prioritizing topics in terms of the threat.MethodologyThe assessment of topics was based on various criterions in order to be assessed as HIGH,MEDIUM, LOW, and UNKNOWN. As such, a cursory review of the OC Groups in BC werereviewed and a list of money laundering topics were identified. An environmental scan wasreviewed of open source new media reports and other open source intelligence reports. Othertopics have been identified through conversations with others with knowledge of money launderingissues (experts), current FSOC and CFSEU projects and topics identified during the moneylaundering national working group (MLWG). See Table 1. Assessment of topics, and Table 2. Listof topics proposed.Page 1 of 12It is proposed to CISBC/YT management that topics be considered for the next 9-12 months.Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information.This Document Is for Intelligence Purposes Only – Not for Legal Use. This document is not to be reclassified, copied, reproduced,used in whole or part or further disseminated, without the consent of the originator. This document is the property of CISBC/YT. Thisrecord may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For CanadianEyes Only.

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091Table 1Assessment of Topics:HighOC groups in BC/Yukon has control over or directs ML operations for their own purposes, and/or for others ML operations, AND 5 or more of thefollowing criteria:- International reach (high scope in operations)- the known use of others (smurfs/nominees/strawmen) & the potential of corrupted staff- Known infiltration of private sector in Canada and/or other jurisdictions- Known infiltration of the public sector in Canada and/or other jurisdictions- Known component of physical violence and/or elements of public safety- Significant challenges for LE agencies (ie. LE in BC alone cannot address)- The known use of trained professionals to assist with ML operations- High public reporting on topic & public perception on LE tackling MLLowUnknownOC groups in BC/Yukon has influence over the vehicle to facilitate ML operations AND 3 or more of the following criteria:- International reach (high scope in operations)- Suspected use of others (smurfs/nominees/strawmen) & the potential of corrupted staff- Suspected Infiltration of private sector- Suspected infiltration of the public sector- Potential component of physical violence and/or elements of public safety- Challenges for LE agencies (ie. LE in BC alone cannot address)- The suspected use of trained professionals to assist with ML operations- Some public reporting on topic & public perception on LE tackling MLOC groups in BC/Yukon has links to, influence or control over the vehicle and suspected to facilitate ML operations AND 2 or more of thefollowing criteria:- Suspected International reach (high scope in operations)- Suspected attempt infiltration of private sector in Canada and/or other jurisdictions- Suspected attempt infiltration of the public sector in Canada and/or other jurisdictions- No component of physical violence and/or elements of public safety- Limited direct involvement with LE agencies- Public reporting: Possible public speculation without concrete info (BC)OC groups in BC/Yukon has unknown influence or control over the vehicle and suspected to facilitate ML operations AND 2 or more of the followingcriterions:- Suspected International reach (high scope in operations)- unknown infiltration of private sector in Canada and/or other jurisdictions- unknown infiltration of the public sector in Canada and/or other jurisdictions- No component of physical violence and/or elements of public safety- Limited direct involvement with LE agencies- Public reporting: Possible public speculation without concrete info (BC)Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.Page 2 of 12Medium

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091Proposed TopicsThere are three topics relating to money laundering that are proposed for follow up and intelligenceassessments. These topics were selected as a result of various attributes, such as public interestand visibility; high threat & use by OC Groups; the potential of high scope (internationalconnectivity); increased challenges to LE/AML regime and the use of MSB, PSP and casinos as amedium to facilitate ML operations.Topics include: 2) LE challenges of investigating & prosecuting Money Laundering in BC and YukonHigh threat due to:- Current challenges (burden of evidence, lack of expertise, lack of resources)- Future challenges- Issues with other countries ML legislation and foreign policies -offshore companies and accounts -foreign criminals can also use Canadian corporations and trusts to conduct money laundering -foreign AML measures and effects of investigation into MLSubtopics:- Charges and proceeding with offence-related property vs proceeds of crime- Seizure: civil forfeiture vs. criminal forfeiture- Partnership with agencies and sharing of information (challenges)Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information.This Document Is for Intelligence Purposes Only – Not for Legal Use. This document is not to be reclassified, copied, reproduced,used in whole or part or further disseminated, without the consent of the originator. This document is the property of CISBC/YT. Thisrecord may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For CanadianEyes Only.Page 3 of 12 1) MSB/Alternative Money Remittance systems (prior topic researched)High threat due to:-There are BC providers that have OC Groups as clients (professional money laundererswith MSB) in other provinces-OC groups in BC/Yukon has control over or directs ML operations for their own purposesand/or for others-Professional ML: Those known to operate MSB are often sought by TNOC Groups tofacilitate ML operations-International reach and international scopeSubtopics:-Registered MSB vs non registered MSB and how the MSB system is based on expectanceto comply. There is no enforcement to comply or register your MSB.-Alternative money remittance systems (eg: hawala, hundi, chitti, and undiyal) used by OCgroups and understanding the token system of Hawala.

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091Page 4 of 123) Professional money launderers- Facilitators of Money Laundering Operations inBC/Yukon-often referred to as third party ML professionalsHigh threat due to:-specialization in laundering POC for a fee-In some cases, professional money launderings can be professional service providers(lawyers, real estate agents, bankers, lawyers) and MSB operators-use occupation, business infrastructure and knowledge to facilitate money laundering forcriminal clientsSubtopics:-International money controllers are high threat as they control the international operations ofML through various countries. It is unknown, but suspected, that there are OC Groups in BCthat are suspected to be international money controllers-LE challenges regarding knowledge, intent and connectivity to the predicate offence-International connectivity including connections to TNOCThird Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information.This Document Is for Intelligence Purposes Only – Not for Legal Use. This document is not to be reclassified, copied, reproduced,used in whole or part or further disseminated, without the consent of the originator. This document is the property of CISBC/YT. Thisrecord may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For CanadianEyes Only.

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091Strategic Priority Considerations-Why? DetailsTBMLHighMSB/ Alternative Money HighRemittance systems(Research was startedfor as a prior topic)Already doneHigh threat due to:-There are BC providers that have OC Groups as clients (professionalmoney launderers with MSB) in other provinces-OC groups in BC/Yukon has control over or directs ML operations fortheir own purposes and/or for others-Professional ML: Have known to operate MSB are often sought byTNOC Groups to facilitate ML operations-International reach and international scopeSubtopics:-Registered MSB vs non registered MSB and how the MSB system isbased on expectance to comply. There is no enforcement to comply orregister your MSB.- Alternative money remittance systems (aka: hawala, hundi, chitti, andundiyal) used by OC groups and understanding the token system of Hawala.LE challenges ofinvestigating &prosecuting MoneyLaunderingHighProfessional Moneylaunderers-Facilitators(general overview)High- Current challenges (burden of evidence, expertise, resources)- Future challenges- Issues with other countries ML legislation and foreign policies offshore companies and accounts foreign criminals can also use Canadian corporations and trusts toconduct money laundering foreign AML measures and effects of investigation ML- Charges and proceeding with offence-related property vs proceeds of crime- Seizure: civil forfeiture vs. criminal forfeiture- Partnership with agencies and sharing of information (challenges)-often referred to as third party ML professionals-specialize in laundering POC for a fee-in some cases, professional money launderings can be professional serviceRank123Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.Page 5 of 12Table 2. Topics

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091providers (eg, lawyers, real estate agents, bankers) and MSB operators-use occupation, business infrastructure and knowledge to facilitate moneylaundering for criminal clients-international money controllers in BC?-LE challenges about knowledge, intent and connections to the predicateoffence-international connectivity including connects to TNOCHigh/Unknown- individuals can be trained professionals, such as lawyers, notaries,accountants, financial industry advisors, real estate agents, goods tradersor business owners; or facilitators operating MSB-various OC Groups use PSP as a medium to facilitate ML operations,unwittingly, while other are criminally inclined (proof of intent, knowledge isdifficult)- there is potential that OC Groups have corrupted PSPs- could just be a subtopic of Professional money launderers- at the current time involved individuals is an information gapHigh-what BC-based OC groups are involved?-defining international money controllers-high threat as they control the international operations of ML throughvarious countries;V3: Ongoing InvestigationPage 6 of 12Professional servicesproviders(General overview further broken downinto other topicsincluding: MSB,Lawyers, Real Estate[Mortgage Brokers,Real Estate Agents]Accountants)International moneycontrollersThird Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091HighBusinesses(General overview further broken downto other topicsincluding: shell andfront companies)HighCasinos and GamingHighExtortionHigh- mortgage lenders can be publicly-traded, privately-held or owned by privateequity companies; wholly or partly owned by a Canadian federally regulatedfinancial institution or by a foreign financial institution- include companies such as mortgage finance companies, real estateinvestment trusts, mortgage investment corporations, mutual fund trusts,syndicated mortgages or individuals acting as private lenders- purchasing property using a mortgage and making the mortgage paymentsusing proceeds of crime- bypass reporting on PCMLTFA- private lenders and OC Groups V3: Ongoing Investigation- are there certain businesses susceptible to be used in ML operations?- cash only businesses- granite companies- import/export companies- overview of the mingling of legitimate funds with illicit funds to obscurethe source- issues of information on beneficial ownership- shell and front companies- Current projects in BC investigating this aspectV3: Ongoing Investigation- public visibility- various OC groups (listed in PTA) have been linked to using casino as amedium to complete some aspect of laundering POC- other gaming mechanisms including online gaming and horse racing- use of refining smaller bills to larger bills- illegal gaming house (non-regulated casinos)- extortion and loan sharking- the use of casino chips to transfer POC?- legislation changes and enforcement challenges- extortion is often conducted in conjunction with or in furtherance of otherThird Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.Page 7 of 12Private lenders/NonFederally regulatedmortgage lenders

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091crimes, such as drug trafficking, illegal gambling andhuman trafficking-Virtual kidnapping-OC groups systematically use extortion as a tool to obtain money- V1Laundering proceeds offentanyl traffickingHighReal EstateHighHuman Trafficking(ranked lower due tolimited information/noknown OC Groupsinvolved in BC)MediumMovement of CashMedium- victims-FINTRAC involvement (Operational Alert) to support Project Guardian-helping business detect and report suspicious dealing that may be linked toillicit fentanyl- methods to launder the POC through real estate transactions: purchasing orselling properties; accessing financial institutions through gatekeepers;assisting the purchase or sale of property; and using mortgage and loanschemes (DOF, 2018)- real estate brokers, sales representatives and developers (under PCMLTFA)vs. non regulated mortgage insurers, land registries and title insurancecompanies- public visibility-V1-Project Protect (targets human trafficking for the purposes of sexualexploitation by focusing on the money laundering aspect of the crime)-overview of movement of cash including cash obtained from illicit activity &integration in legitimate channels-physical cash movement vs wire transfers (what is the norm? Is physicalcash dying out)Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.Page 8 of 12-online prostitution advertisement ( issues such as Backpage.com) & is therea Canadian nexus

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091Mass Marketing Fraud(MMF)MediumSecurities Dealers/Stock ManipulationMedium-believed to be mainly used in the layering stage-securities traded over the counter are exchanged directly between entitiesrather than through an organized stock exchange-Use of off-book transactions, registered representatives, offshore accountsand nominees-OC nexus confirmed V1ATM White MachinesMediumCybercrime and the useof virtual currencyMediumHigh-Value GoodsMedium-the use of privately automated teller machines-criminal actor or criminal directed nominee using to machine for placementstage of POC-V3: OngoingInvestigation-methods?-the use of the internet (predicate offences such as online prostitution,extortions and sales of drugs, weapons etc. on the Darknet)-the use of virtual currency as POC-the use of cryptocurrency machines for ML- the use of high value goods such as automobiles, boats, yachts, art,Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.Page 9 of 12-foreign currency regulations-virtual currency- is very prevalent in Canada and Lower Mainland is considered a base ofoperation for MMF schemes; common types of scams in Canadainclude service scams, prize scams and extortion scams- use a range of ML methods and sectors, including smurfing, structuring, theuse of nominees and money mules, shell companies, MSBs, the informalbanking system and front companies- large # of victims- international reach- OCG in BC have been connected to MMF V1

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091antiques property, jewelry used instead on monetary instrument- laundering POC through such goods-the use of high value goods such as vehicles at the integration, possiblyplacement, phase of ML- lack of monitoring and reporting to FINTRAC, public visibility- legislation changes?Dealers in preciousmetals and stonesMedium- securities dealers- the use of precious metals and stones as a form of trade- the value of diamonds/gold and issues with importing; what is the true valueof importing diamonds in bulkTax EvasionlowFINTRAC andrelationship withfinancial institutionsML and foreign policieslow-underpaying or evading the payment of taxes owing orto unlawfully claim refunds or credits-eg: Paradise papers-unconfirmed links to OC Groups- reporting entities vs non reporting entities- enforcement limitationsPrepaid CardslowLife Insuranceunknownlow-challenges of different jurisdictions-offshore companies and accounts-foreign criminals can also use Canadian corporations and trusts to conductmoney laundering-foreign AML measures and effects of investigating ML- the use of prepaid cards to refine and transport value- anonymous and portable- closed loop cards vs open loop cards- life insurance companies offer a variety of vulnerableproducts and services, including wealth management and estate planning- dirty funds in the forms of checks, money orders or wire transfer toThird Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.Page 10 of 12Dealers(General overview further broken down toautomobiles, dealersin precious metal andstones)

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091unknownNon-profit organizationsunknownCrowd FundingunknownWildlife Crimeunknown-Low level sophistication-appears to be focused on immediately placing or integratingthe proceeds for personal usePage 11 of 12Corruption in Canadapurchase a life insurance policy and cash it out prematurely-life insurance companies rely on third parties andindependent brokers to sell their product-reporting entity under PCMLTFA-unknown re occurrences in BC- bribery of officials to facilitate ML by undermining AML measures- investigating offices or private sector compliance staff- international organizations, political influence- unknown activity by OC Groups in BC currently- unknowingly sending money abroad for ML or terrorist financing- are there links to OC?- not subject to PCMLTFA-Low level sophistication-Creating fraudulent situations, victims send funds, creates need for MLThird Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence PurposesOnly – Not for Legal Use. This document is not to be reclassified, copied, reproduced, used in whole or part or further disseminated, without the consent of the originator. Thisdocument is the property of CISBC/YT. This record may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For Canadian Eyes Only.

Protected « B »Criminal Intelligence Service BC/YukonMailstop #704 – 14200 Green Timbers Way Surrey, BC V3T 6P3Phone: 778-290-5180 Fax: 778-290-6091Page 12 of 12This page has intentionally been left blank.Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information.This Document Is for Intelligence Purposes Only – Not for Legal Use. This document is not to be reclassified, copied, reproduced,used in whole or part or further disseminated, without the consent of the originator. This document is the property of CISBC/YT. Thisrecord may be subject to mandatory exemption under the access to information and privacy acts. If access is requested under thatlegislation, no decision regarding disclosure should be taken without prior consultation with the CISBC/YT Bureau. For CanadianEyes Only.

Criminal Intelligence Service BC/Yukon Mailstop #704 - 14200 Green Timbers Way Surrey, BC V3T 6P3 Phone: 778-290-5180 Fax: 778-290-6091 Third Party Rule Applies. Do Not Disseminate. Contact the Author of This Document for Permission to Release Any Information. This Document Is for Intelligence Purposes Only - Not for Legal Use.