Check Against Delivery
Thank you.
This is the first time that FINTRAC has participated in this conference and I am pleased to be here. I would like to thank Garry Robertson and the organizing committee for inviting me to speak. It was Garry who had the foresight to recognize the common cause that we all have in combating organized crime and terrorism. After reviewing the subjects that are discussed in this forum, I think FINTRAC fits well and we have something to offer this group.
As a newcomer to this forum, I will say a few words about FINTRAC, by way of introduction. I will also make some observations about money laundering and terrorist financing as they relate to car theft and argue that FINTRAC can bring valuable information to police investigations of car theft networks.
For those of you who are unfamiliar with FINTRAC, our agency was created nearly nine years ago as Canada’s financial intelligence unit, or FIU for short. From once being a rare animal, FIUs can now be found in most countries in the world. While there are different configurations they all exist because law enforcement and security agencies need some entity to help them follow the money trail, especially across jurisdictions and provide them with valuable financial intelligence.
FINTRAC’s mandate is to assist in the detection and deterrence of money laundering and terrorist activity financing in Canada and around the world.
We are but one of many key partners in Canada’s broad anti-money laundering/anti-terrorist financing regime. In addition to our federal partners, there are many provincial and municipal police forces and private industry partners who all play a critical role.
I will explain a bit how we work so you can see how our product might very well benefit auto theft investigations undertaken by police.
It starts with financial reports we receive from banks and other financial entities, such as credit unions and money services businesses. These entities must send reports to FINTRAC on:
- Suspicious transactions and suspicious attempted transactions, regardless of their dollar value;
- Cash deposits of $10,000 or more;
- Wire transfers into or out of Canada of $10,000 or more; and
- Terrorist property holdings.
In addition, anyone crossing the border must report to the Canada Border Services Agency the movements of cash or monetary instruments of $10,000 or more into or out of Canada. We have all crossed the border and faced the questions about carrying tobacco, alcohol or more than $10,000 in cash from a customs officer. I would like to point out that it is FINTRAC that receives those reports.
We receive more than a million transaction reports each month, and 99% of these reports are sent to us electronically. This fact enables us to access the reports immediately upon receipt. This is of great benefit in dealing with the large volume of information and putting it to use in our analysis.
We have so many millions of records that searching these data banks is like looking for a needle in a haystack in a field of haystacks. However, we have developed sophisticated data mining tools and methodologies that enable us to detect patterns of suspected money laundering and start following the money trail. Sometimes we see cases where the criminals have used up to sixteen or more financial entities across the country to disperse and hide their assets. By law, only we have direct access to this unique national database.
There is something concrete and precise in the nature of financial transactions. The details of a financial transaction must be exact for the proper amount of money to move from one account to another. This attention to detail on the part of those carrying out a financial transaction is a net benefit for financial intelligence units. This precision and the many different types of transactions that are reported are what make financial transaction information such a rich set of data for analysis and so useful for bringing focus to investigations.
As an example, two individuals may be associated or believed to be associated in some criminal enterprise. They may have met on a number of occasions but this may not give a complete picture of their relationship.
Now, if there are records of financial transactions between the two, these transactions link those two individuals in a way that is tangible and gives real significance to the relationship. This is what I mean when I say that transactions present a rich source of data.
As FINTRAC’s director, I know first-hand that following the money and making connections through financial transactions can benefit police investigations where proceeds of crime and money laundering are involved. We have been able to offer assistance in following the money trail to numerous drug trafficking, fraud and other types of investigations in the last few years.
I am pleased to say that that over the years we have been getting progressively better at what we do and we are now able to assist more investigations than at any time in our past.
Through our analysis, we are sometimes able to expand what is known about an existing criminal network by identifying individuals and businesses that were previously unknown to police. Often, we can shed light on the size and scope of a criminal network or the length of time it has been operating. Ultimately, the financial transactions create a trail to assets that may be seized.
Following the money can shed light on other elements of the criminal operation, for example it could help identify the payments made for the shipments of stolen vehicles. As I said, FINTRAC receives and analyzes wire transfers, of ten thousand dollars or more, that enter or leave Canada and we have observed that such transfers have been used in cases which we suspect are related to auto theft.
Providing police with bank accounts and other transactional information we suspect is related to making payments for stolen vehicles might help police investigators in different cities recognize the connection between thefts in different jurisdictions, particularly if one buyer is purchasing from many sources. This may be visible only in the thread of financial transactions.
In eight years, we have been able to offer some form of assistance to hundreds upon hundreds of investigations. Only eight of these investigations, from what we are able to determine, involved car theft rings. Given the magnitude of the car theft problem, in my view, this number is too low. I think we can do more to help police in these types of investigations and that is why I think it is important that FINTRAC be here today.
While eight cases is not a large number, it does permit some observations about the suspected laundering of criminal profits by car theft rings.
The first observation has to do with use of front companies. Based on what we have observed, those engaged in selling stolen vehicles and parts have shown a tendency to operate what appear to be front companies that are linked to the automotive market such as used car dealerships, vehicle recycling and gas stations.
Police have also indicated to us that there have also been companies that have no apparent link to the automotive industry, such as telemarketing companies, shipping companies and even one jewelry store. The use of a jewelry store as a front company to ship stolen car parts overseas in containers is certainly unusual.
We have also observed that groups involved in these suspected cases appear to be involved in other types of criminal activity as well, including: telemarketing fraud, bank fraud, marijuana production and distribution and identity theft.
The diversity of criminal business lines may come as no surprise to you. All these crimes are entered into for one simple reason: profit. And all of them are certainly profitable. This brings us back to money.
Vehicles are being stolen, because people are getting paid. None of these operations was a registered charity devoted to the redistribution of luxury SUVs. Quite simply, the money matters to the criminals stealing the cars, and it should matter to all of us as well.
If there is something that moves faster than a stolen car leaving the streets of Montreal, it would be the wire transfer that is used to pay for the shipment of that car abroad. Funds can move around the world in the blink of an eye through international wire transfers and, as I noted previously, we get reports of these transfers.
The accounts of these suspected front companies received large cash deposits and wire transfers from overseas from bank accounts located in the United States, Dominican Republic, Hong Kong, Nigeria, Italy, Belgium, and the Democratic Republic of Congo.
Another observed trend is that the suspected proceeds generated from these criminal activities seem to be leaving Canada. These same apparent front companies ordered wire transfers from their Canadian accounts to entities in: the United States, Andorra, Pakistan, Latvia, Dubai, Nigeria, China and Taiwan.
It appears that the money generated by this criminal activity is moving out of the country as quickly as the cars. This may pose a problem for a Canadian police investigator looking to seize criminal proceeds –and this is regrettable because seizing and forfeiting criminal profits is really hitting them where it hurts. However, the same intelligence that FINTRAC provides to police can be provided to foreign financial intelligence units to help further money laundering investigations abroad.
These are the observations that we can make from the eight cases over eight years. I have shared them with the goal of perhaps bring some new information to this subject and to let you know that FINTRAC can be of assistance in dealing with some aspects of investigative work related to auto theft.
A few weeks ago, the Government introduced legislation to combat the serious problem of auto theft. This move will update the Criminal Code to reflect the seriousness of this problem. It will improve the tools police have at their disposal to deal with this type of crime. As you look forward to these improvements I would encourage you as well to consider the assistance that FINTRAC may be able to offer to auto theft investigations.
Finally, it is worth noting that FINTRAC is not an investigative body. Rather, it is an analytical agency, which is uniquely positioned to offer tactical and strategic intelligence to further police investigations. This intelligence is available to Canadian police forces and to sister foreign agencies such as our American counterpart, FinCEN.
For a police investigator, knowing something more about the financial transactions relating to a case may give the small edge needed to lay charges. Sometimes knowing just a little bit more can be all it takes to solve the puzzle. That’s why FINTRAC was created.
I must be cautious to not over promise. Financial intelligence is not a silver bullet to solve all problems related to auto theft rings; but it should be seen as one more tool in the fight against this pervasive and all too costly criminal activity. The criminals are in this for the money and FINTRAC is here to help police follow the money trail so that not only can those responsible for these crimes be caught, but their assets can seized. Thank you for your time.
