Canada still a money laundering concern says 2011 International Narcotics Control Strategy Report

By Christine Duhaime | March 14th, 2011

The 2011 U.S. Department of State International Narcotics Control Strategy Report released on March 1, has once again determined that Canada is a major money laundering country, and in addition, has determined that Canada is a major precursor chemical source country. According to the Report, money laundering in Canada generally occurs though the following methods:

  • Smuggling,
  • Money services businesses,
  • Casinos,
  • Real estate sales,
  • Wire transfers,
  • Establishment by Canadians of offshore trusts and corporations,
  • Credit cards, and
  • Stored value cards, also known as prepaid access.

The Report notes several areas of concern for Canada, including:

  • Lack of enhanced due diligence in AML legislation for domestic politically exposed persons,
  • Exemption of lawyers from AML legislation,
  • Lack of financial resources for law enforcement to pursue money launderers, and
  • Continued concern with casino AML procedures.

In his Presidential Determination No. 2010-16, President Obama noted that organized crime in Canada continues to produce large quantities of MDMA (ecstasy) and high-potency marijuana that is trafficked to the U.S. and that about 50% of the MDMA seized in the U.S. originated from Canada.

Smuggler in Alberta pleads guilty to money laundering

By Christine Duhaime | March 10th, 2011

An Ontario resident, Joseph Butler, pleaded guilty in a Calgary court today to money laundering and failing to report the importation of over $10,000 into Canada. Butler attempted to enter Canada from the U.S. without disclosing that he was carrying US$477,050 in cash. The cash was concealed in at compartment in a horse trailer when it was discovered by the Canada Border Services Agency. The money was proceeds from drug trafficking. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires that every person report to the CBSA when they import to Canada or export from Canada cash (or other monetary instrument) equal to or greater than $10,000. It is not illegal to import or export cash but amounts equal to or greater than $10,000 must be reported. The conviction today was the first money laundering conviction in Alberta under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Quebec man sentenced for money laundering in U.S.

By Christine Duhaime | March 6th, 2011

Marc-Andre Cusson, a resident of Sutton, Quebec, was sentenced to 14 years in prison in Vermont for his role in a drug trafficking and money laundering operation in Canada and the U.S. Cusson was accused of being the ringleader in the operation that imported tons of marijuana to the U.S. and smuggled millions of U.S. currency into Canada.

He and 25 co-accused were arrested in 2002 after an investigation by the RCMP, the Surete du Quebec and the U.S. Drug and Enforcement Administration. In 2003, the U.S. requested the extradition of Cusson on numerous charges including money laundering, conspiracy to export cash in excess of $10,000 without filing a declaration and drug trafficking. In 2009, the Court of Appeal for Quebec allowed Cusson’s extradition (see Cusson c. Canada (Ministre de la Justice), 2009 QCCA 1849).

Cusson appealed his extradition to the Supreme Court of Canada but the request for leave to appeal was dismissed a year ago. In 2005, Cusson was convicted in Canada for similar offences and sentenced to 10 years in prison which was subsequently reduced to 4 years.

Teddy bears sales used for money laundering

By Christine Duhaime | March 5th, 2011

The third executive of a Los Angeles toy company, Meichun Cheng Huang, pleaded guilty to conspiracy today as part of a black market peso exchange scheme that laundered almost US$9 million for drug cartels in Mexico and Columbia using teddy bears and Topo Gigio mouse dolls. Huang was a co-owner of the toy company, Angel Toy Corp. Another co-owner and the Corporation’s accountant were arrested in Los Angeles in July. According to the indictment, Angel Toy Corp. directed Colombian and Mexican drug clients to drop cash off at the Corporation’s offices or deposit it directly into their corporate bank accounts. Corporate executives would then wire the funds to China for the purchase of toys that were shipped to Columbia and sold. The pesos generated from the sale of the teddy bears were reimbursed to the drug cartels.

Romanian pleads guilty to eBay cyberlaundering scam

By Christine Duhaime | February 20th, 2011

A Romanian man has pleaded guilty for his role in a cyberlaundering scam that took in about US$2.7 million from users of online marketplaces such as eBay, Craigslist and AutoTrader.

Adrian Ghighina, 33, of Bucharest, pleaded guilty to conspiracy, bank fraud and money laundering in U.S. District Court for the District of Illinois. Ghighina was a money mule whose job was to pick up cash wired to him by online buyers who thought they were purchasing cars, RVs, and motorcycles from legitimate sellers. He apparently used a number of tricks to get prospective buyers to wire funds to him by hijacking legitimate eBay accounts, sending buyers fake “second chance” offers, or pretending people’s money would be held in escrow until the goods they bought were delivered.

Ghighina would keep between 20% and 40% of the cash wired to him, which often totalled thousands of dollars at a time.

Afghan money exchange businesses targeted by Treasury Department

By Christine Duhaime | February 18th, 2011

The U.S. Department of the Treasury has designated two money services businesses in Afghanistan, the New Ansari Money Exchange (and its alleged founder Haji Abdullah Ansari) and the Ahmad Shah Money Exchange (and its alleged owner Ahmad Shah Hakimi), as major money laundering vehicles that facilitate the trafficking of drugs out of Afghanistan.

The designation is made under the U.S. Foreign Narcotics Kingpin Designation Act. The U.S. Treasury believes that the New Ansari Money Exchange laundered proceeds of crime for two major drug trafficking organizations that supply opium, morphine and heroin to markets  in Southwest Asia and the Middle East. Several people associated with the money services businesses were also blacklisted for their role in helping to move billions of dollars out of Afghanistan to “conceal illicit narcotics proceeds,” the Treasury Department said in a statement. The designation effectively freezes any assets the designees have in the U.S. and prohibits U.S. persons from conducting financial or commercial transactions with persons and entities designated under the Kingpin Act.

You can read more here.

Swiss banks freeze assets of departed Egyptian leader Hosni Mubarak

By Christine Duhaime | February 14th, 2011

The Swiss government has announced that it has frozen several bank accounts that it suspects belong to departed Egyptian leader Hosni Mubarak, his family and close associates, until the source of funds can be verified. Mubarak’s wealth is estimated to be $51 billion; a large portion of it is said to be held in bank accounts and real estate in London.

Mubarak is a politically exposed person and as such, any funds he deposited into bank accounts in Europe should have been treated with special scrutiny to ensure that the funds are not proceeds of crime. A politically exposed person is a person who is or was a head of state, head of government, high ranking government official, judge or ambassador, and includes their family members.

Tamil migrant admits working for terrorist group

By Christine Duhaime | February 13th, 2011

According to this article in the Vancouver Sun, one of the Tamil migrants who arrived in Canada last August aboard the MV Sun Sea, has admitted that he worked for the Liberation Tigers of Tamil Eelam (LTTE) as a mechanic and helped them dig bunkers in Sri Lanka. The LTTE is a designated terrorist group in several countries, including Canada and the U.S. The MV Sun Sea was used to smuggle 492 Tamil migrants to Canada.

Continue reading →

U.S. Treasury says bank with Canadian ties is a money laundering concern

By Christine Duhaime | February 10th, 2011

The US Department of the Treasury today announced that it has designated the Lebanese Canadian Bank SAL and its subsidiaries as a “primary money laundering concern” under the Patriot Act, because it facilitates the laundering of money from drug trafficking and trade-based money laundering. The bank has an office in Montreal and maintains extensive correspondent accounts with banks worldwide.

The designation requires U.S. financial institutions to take special measures against the bank pursuant to rules implemented by FinCEN.

FinCEN has issued a proposed rule that would prohibit financial institutions from opening and maintaining correspondent accounts for the Lebanese Canadian Bank. A correspondent account is one that is set up to receive deposits from, or make payments or other disbursements on behalf of, a foreign bank, or handle other financial transactions related to a foreign bank. Most banking relationships between Canadian banks and foreign banks are set up as correspondent accounts.

Alleged Lebanese drug kingpin Ayman Joumaa and his associates are accused of using the bank to launder as much as US$200 million per month in narcotics proceeds by various classical money laundering techniques including bulk cash smuggling and currency exchanges.

On January 26, 2011, the US Department of the Treasury’s Office of Foreign Assets Control designated Ayman Joumaa, nine other individuals and 19 entities as “specially designated narcotics traffickers” under the U.S. Foreign Narcotics Kingpin Designation Act.

The Kingpin Act blocks all property and interests in property owned or controlled by foreign nationals who are believed to be significant narcotics traffickers. US persons are prohibited from engaging in any transaction or dealing in property or interests in the property of a designated kingpin. A person who violates the Kingpin Act by engaging in a transaction with a kingpin is liable to a fine of US$5 million and a term of imprisonment of up to 30 years.

The US Department of the Treasury also announced that, according to its information, Hizballah derived financial support from the criminal activities of Joumaa’s network. Hizballah is a listed terrorist group in several countries, including Canada and the US.

Suspicious activity reports show increase in mortgage fraud in U.S.

By Christine Duhaime | January 31st, 2011

Money laundering suspicious activity reports (SARs) filed with FinCEN, the U.S. financial intelligence unit, show a slight increase in mortgage fraud in the U.S. According to FinCEN’s third quarter 2010 mortgage report, “Mortgage Loan Fraud SAR Filings“, 9% of all SARs filed in the 2010 third quarter indicated mortgage loan fraud as a suspected activity, an increase of 2% over the same period in 2009.

Key findings in the report:

  • More than 80% of SARs indicating mortgage loan fraud involved suspicious activity amounts under US$500,000.
  • Nearly all SARs indicating mortgage loan fraud with reported loss amounts indicated amounts under US$500,000.
  • Reporting entities who filed SARs with FinCEN identified over 50% of SARs indicating mortgage loan fraud as borrows, not lenders.
  • California and Florida had the highest number of incidents, followed by New York and Illinois. Nevada and Arizona were the third and fourth highest per capita in the U.S.