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Overview | Money laundering and terrorist financing indicators—overview and red flags | ML/TF indicators are potential red flags that could initiate suspicion or indicate that something may be unusual in the absence of a reasonable explanation. Red flags typically stem from one or more factual characteristics, behaviours, patterns or other contextual factors that identify irregularities related to financi... | Audience is Financial entities |
Important consideration | Pretext | One piece of the puzzle
The ML/TF indicators in this guidance are not an exhaustive list of ML/TF indicators to support all suspicious scenarios. These ML/TF indicators should be considered as examples to guide the development of your own process to determine when you have reasonable grounds to suspect that the transac... | null |
ML Indicators (money laundering) | ML/TF indicators related to identifying the person or entity | The following are examples of ML/TF indicators that you may observe when identifying persons or entities.
There is an inability to properly identify the client or there are questions surrounding the client's identity.
When opening an account, the client refuses or tries to avoid providing information required by the fi... | null |
ML Indicators (money laundering) | ML/TF indicators related to client behaviour | The contextual information acquired through the know your client (KYC) requirements or the behaviour of a client, particularly surrounding a transaction or a pattern of transactions, may lead you to conduct an assessment in order to determine if you are required to submit an STR to FINTRAC. The following are some examp... | null |
ML Indicators (money laundering) | ML/TF indicators surrounding the financial transactions in relation to the person/entity profile | Clearly understanding the expected activity of a person or entity will allow you to assess their financial activity with the proper lens. For example, an entity involved in an industry that is not normally cash-intensive receiving excessive cash deposits or a person conducting financial transactions atypical of their f... | null |
ML Indicators (money laundering) | ML/TF indicators related to products and services | Accounts can take different forms (e.g. chequing, savings, investment, etc.) and for the purposes of this section, the ML/TF indicators below will aim to address the ML/TF risks linked to different types of accounts held by various reporting entities in Canada. There are many ML/TF indicators related to account activit... | null |
ML Indicators (money laundering) | ML/TF indicators related to change in account activity | Certain changes regarding an account may be indicative of ML/TF for a multitude of reasons including, but not limited to, the use of an account to suddenly launder or transmit funds, an increase in volume, changes in ownership of an account, etc. Changes in account activity may trigger a need for further assessment of ... | null |
ML Indicators (money laundering) | ML/TF indicators based on atypical transactional activity | There are certain transactions that are outside the normal conduct of your everyday business. These transactions may be indicative of a suspicious transaction, and would require additional assessment. Some examples of ML/TF indicators based on atypical transactional activity are listed below.
The client has multiple pr... | null |
ML Indicators (money laundering) | ML/TF indicators related to transactions structured below the reporting or identification requirements | Structuring of transactions to avoid reporting or identification requirements is a common method for committing or attempting to commit an ML/TF offence. There are multiple thresholds which trigger reporting/identification requirements by a reporting entity. Some examples of ML/TF indicators which may be indicative of ... | null |
ML Indicators (money laundering) | ML/TF indicators involving wire transfers (including electronic funds transfers) | In our current global environment, it is increasingly easier to transfer funds to, from or through multiple jurisdictions (municipal, national or international) in a rapid fashion. This presents an increased ML/TF risk as transactions passing through multiple accounts and/or jurisdictions increase the difficulty for re... | null |
ML Indicators (money laundering) | ML/TF indicators related to transactions that involve non-Canadian jurisdictions | There are certain types of transactions that may be sent or received from jurisdictions outside of Canada where there is higher ML/TF risk due to more permissible laws or the local ML/TF threat environment. The following are examples to consider when making an assessment of the financial transaction conducted by a pers... | null |
ML Indicators (money laundering) | ML/TF indicators related to the use of other parties | In the course of a "normal" financial transaction, there are a "normal" number of parties who engage in the transaction, depending on the nature of the transaction at hand. For example, in the instance of depositing cash to a personal bank account, there is generally one party to the transaction: the person who holds t... | null |
TF Indicators (Terrorist Financing) | TF Indicators | In Canada, TF offences make it a crime to knowingly collect or provide property, which can include financial or other related services, for terrorist purposes. This section is focused on examples that are specific to the possible commission of a TF offence. However, please note that the other ML/TF indicators in this g... | null |
TF Indicators (Terrorist Financing) | Indicators specifically related to TF | The indicators below are some examples of indicators relating to TF.
Transactions involving certain high-risk jurisdictions such as locations in the midst of or in proximity to, armed conflict where terrorist groups operate or locations which are subject to weaker ML/TF controls.
An account opened in the name of an ent... | null |
Sexual Exploitation Indicators | Updated Indicators: Laundering of proceeds from human trafficking for sexual exploitation | Purpose
This Operational Alert updates FINTRAC's 2016 Operational Alert "Indicators: The laundering of illicit proceeds from human trafficking for sexual exploitation" with additional indicators in support of Project Protect to assist reporting entities in recognizing financial transactions suspected of being related t... | null |
Sexual Exploitation Indicators | What is human trafficking? | Human trafficking, also referred to as trafficking in persons, involves recruiting, transporting, transferring, receiving, holding, concealing, harbouring, or exercising control, direction or influence over that person, for the purpose of exploitation, generally for sexual exploitation or forced labour. | null |
Sexual Exploitation Indicators | Sexual Exploitation Money Laundering Indicators | elow are additional money laundering indicators related to human trafficking for sexual exploitation derived from FINTRAC's analysis and reflect the types and patterns of transactions, contextual factors and those that emphasize the importance of knowing your client. All indicators from FINTRAC's 2016 Operational Alert... | null |
Contact FINTRAC | Reporting to FINTRAC | To facilitate FINTRAC's disclosure process, please include the term #Project PROTECT or #PROTECT in Part G-Description of suspicious activity on the Suspicious Transaction Report. See also,Reporting suspicious transactions to FINTRAC. | null |
Contact FINTRAC | Contact FINTRAC | Email: guidelines-lignesdirectrices@fintrac-canafe.gc.ca
Telephone: 1-866-346-8722 (toll-free)
Mail: FINTRAC, 24th Floor, 234 Laurier Avenue West, Ottawa ON K1P 1H7, Canada
© Her Majesty the Queen in Right of Canada, 2021.
Cat. No. FD4-13/2021E-PDF
ISBN 978-0-660-39271-4 | null |
Red Flags and Indicators Applicable to Sex Trafficking & Forced Labor | In-Person / Behavioral Red Flags | Indicators of a potential trafficker: • The potential trafficker could be speaking on behalf of the individual • Insistence on being present for every aspect of engagement • Keeps possession of identification documents or money • Attempts to fill out paperwork or answer questions without consulting the individual • For... | null |
Red Flags and Indicators Applicable to Sex Trafficking & Forced Labor | KYC (Know Your Customer) Red Flags | The individual does not have a physical address (i.e.: PO Box address) • False identification documents are provided • Inexplicable lifestyle compared to the customer’s profile • The individual’s email address corresponds to online classified ads known to cater to the sex industry • Multiple individuals with the same a... | null |
Red Flags and Indicators Applicable to Sex Trafficking & Forced Labor | Transactional Red Flags | High and/or frequent expenditure at airports, ports, other transport hubs or overseas, inconsistent with customer’s personal use or stated business activity • Income received and immediately withdrawn in cash • Account is funded primarily via cash deposits and funds transfers from other individuals • Payments to logist... | null |
Red Flags and Indicators Applicable to Sex Trafficking & Forced Labor | Red Flags For Traditional Financial Institutions | Although this document is intended to identify known red flags related cryptocurrency transactions, as traditional financial institutions are seeing more crypto-related transactions occur in their customer’s accounts, please note the presence of cryptocurrency transactions (typically consistent small transfers on a sch... | null |
Red Flags and Indicators Applicable to Sex Trafficking & Forced Labor | Red Flags Specific to Cryptocurrency Exchange | The following are indicators/red flags to help detect potential money laundering on cryptocurrency exchange platforms. Human trafficking is one of the most profitable crimes in the world, often a predicate crime to money laundering. Below points are useful to consider in investigating financial flows related to human t... | null |
Red Flags and Indicators Applicable to Sex Trafficking & Forced Labor | Red Flags For Bitcoin Point of Sale Companies | The following section represents red flags that are known to be associated with human trafficking that may be seen by compliance employees at a Bitcoin point of sale company (i.e BTMs). Although, often BTM companies only exchange FIAT and cryptocurrency, with no remittance services provided, the transaction patterns an... | null |
FINTRAC's compliance guidance | Reporting suspicious transactions to FINTRAC | This guidance explains the requirement to report suspicious transactions to FINTRAC.
Note:
Throughout this guidance, references to dollar amounts (such as $10,000) are in Canadian dollars unless otherwise specified.
All references to transactions should be read to include both attempted transactions and completed trans... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 1. Who must comply | All reporting entities and their employees must report suspicious transactions.
If you are a person who is an employee of a reporting entity and your employer is actively reporting suspicious transactions, we do not require duplicate reporting. An employee is only expected to report suspicious transactions to FINTRAC i... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 2. What is a Suspicious Transaction Report | A suspicious transaction report is a type of report that you must submit to FINTRAC when a financial transaction occurs, or is attempted, in the course of your activities and there are reasonable grounds to suspect that the transaction is related to the commission or the attempted commission of a money laundering or te... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 3. What are reasonable grounds to suspect | Reasonable grounds to suspect is the required threshold to submit a Suspicious Transaction Report to FINTRAC and is a step above simple suspicion, meaning that there is a possibility that a money laundering or terrorist activity financing offence has occurred.
You do not have to verify the facts, context or money laund... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 4. When to submit a Suspicious Transaction Report | You must submit the Suspicious Transaction Report to FINTRAC as soon as practicable after you have completed measures that enable you to establish that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering or terrorist activity financing... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 5. How to submit a report to FINTRAC | You must submit a suspicious transaction report to FINTRAC electronically using the following options:
FINTRAC Web Reporting System (FWR) (geared towards reporting entities with lower reporting volumes)
FINTRAC API report submission (secure system-to-system transfer of report information)
Paper reporting
If you do not ... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 6. The form for reporting suspicious transactions | Form structure
The form for reporting suspicious transactions has 6 sections:
General information
Transaction information
Starting action
Completing action
Details of suspicion
Action taken
Structure of the Suspicious Transaction Report form: Main sections and types of information for each section
Main sections of the ... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 7. Other requirements associated with suspicious transactions | Compliance program
Your compliance policies and procedures must outline your process and criteria on:
how you identify and assess Suspicious Transactions Reports
submitting reports to FINTRAC
If you have an automated or triggering system in place to detect suspicious transactions, a person may still assess the transact... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 8. Reporting subsequent suspicious transactions | Once you have reached the reasonable grounds to suspect threshold, you must submit a Suspicious Transaction Report. If there are subsequent transactions, you must keep reporting the transactions as long as the suspicion remains.
You are expected to periodically re-assess the client to verify that the level of suspicion... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 9. FINTRAC's expectations for completing a Suspicious Transaction Report | It is your responsibility to ensure that the information provided in a Suspicious Transaction Report is complete and accurate. It is also important that you submit comprehensive and high quality Suspicious Transaction Report to facilitate FINTRAC's analysis process and disclosure to recipients.
In the narrative section... | null |
FINTRAC's compliance guidance | FINTRAC REPORTING 10. Common Suspicious Transaction Report deficiencies to avoid | The following are examples of deficiencies that FINTRAC has identified through its assessments and other compliance activities. FINTRAC is sharing these examples to illustrate common errors that you can avoid.
Using a higher threshold as your basis for reporting
You are required to submit a Suspicious Transaction Repor... | null |
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