![]() ![]() ![]() They can manifest themselves in various ways and often involve formal financial services, international trade and multiple sectors. Underground banking arrangements are often multi-layered and sophisticated. For the purposes of this advisory, underground banking will refer to alternative mechanisms that facilitate the unlawful remittance of funds or value between jurisdictions. While IVTS are often important to diaspora communities to enable the sending and receiving of legitimate funds overseas, the versatility and global reach of underground banking makes it equally susceptible to misuse, specifically by criminal groups for money laundering and financing of terrorist activities. IVTS are global in reach and vulnerable to abuse. Not doing so could result in criminal or administrative penalties. Money services businesses must fulfill specific obligations as required by the PCMLTFA and associated Regulations, to help combat money laundering and terrorist activity financing in Canada. Individuals and entities carrying out the above-noted activities are required to register with FINTRAC. Operating an unregistered money services business is a violation and an offence under the PCMLTFA. The PCMLTFA and associated Regulations set out registration and other obligations for individuals and entities, both foreign and domestic, that are engaged in the business of foreign exchange dealing, remitting or transmitting funds by any means or through any person, entity or electronic funds transfer network, issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments except for cheques payable to a named person or entity, or dealing in virtual currencies. The advisory reviews trends and patterns identified through FINTRAC's analysis of suspicious transaction reports and disclosures to law enforcement related to underground banking.Ĭanada regulates the informal funds transfer sector. The advisory describes key attributes of underground banking in Canada, particularly as carried out by unregistered money services businesses in Metro Vancouver, the Greater Toronto Area, and, to a lesser extent, in the Calgary-Edmonton Corridor. As such, this advisory is designed to help businesses, financial institutions and the public understand and identify the characteristics of this activity and the types of individuals and entities that may be involved to better identify suspicious financial transactions, which could be reported to FINTRAC in support of law enforcement investigations and FINTRAC compliance activities. ![]() Money services businesses that are not registered with FINTRAC-and therefore not fulfilling reporting and other obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations-are susceptible to misuse by criminals for money laundering and financing of terrorist activities. This Sectoral and Geographic Advisory focuses on money laundering and terrorist activity financing risks associated with underground banking through unregistered money services businesses (MSBs). For a PDF version of this publication in Farsi, or in traditional or simplified Chinese, please contact of Advisory.Video – Sectoral and Geographic Advisory: Underground banking through unregistered money services businesses.
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