Guideline 2: Suspicious Transactions

March 24, 2003

4. Examples of Common Indicators

   4.1 General 4.2 Knowledge of Reporting or Record Keeping Requirements 4.3 Identity Documents 4.4 Cash Transactions  4.5 Economic Purpose 4.6 Transactions Involving Accounts 4.7 Transactions Involving Areas Outside Canada 4.8 Transactions Related to Offshore Business Activity

4. Examples of Common Indicators

The following are examples of common indicators that may point to a suspicious transaction. Please read Section 3 for general information about identifying suspicious transactions and how to use these indicators.

4.1 General

• Client admits or makes statements about involvement in criminal activities.
• Client does not want correspondence sent to home address.
• Client appears to have accounts with several financial institutions in one area for no apparent reason.
• Client repeatedly uses an address but frequently changes the names involved.
• Client is accompanied and watched.
• Client shows uncommon curiosity about internal systems, controls and policies.
• Client has only vague knowledge of the amount of a deposit.
• Client presents confusing details about the transaction.
• Client over justifies or explains the transaction.
• Client is secretive and reluctant to meet in person.
• Client is nervous, not in keeping with the transaction.
• Client is involved in transactions that are suspicious but seems blind to being involved in money laundering activities.
• Clients home or business telephone number has been disconnected or there is no such number when an attempt is made to contact client shortly after opening account.
• Client is involved in activity out-of-keeping for that individual or business.
• Client insists that a transaction be done quickly.
• Inconsistencies appear in the clients presentation of the transaction.
• Client appears to have recently established a series of new relationships with different financial entities.
• Client attempts to develop close rapport with staff.
• Client uses aliases and a variety of similar but different addresses. 
• Client uses a post office box or General Delivery address, or other type of mail drop address, instead of a street address when this is not the norm for that area.
• Client offers you money, gratuities or unusual favours for the provision of services that may appear unusual or suspicious.
• You are aware that a client is the subject of a money laundering or terrorist financing investigation.

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4.2 Knowledge of Reporting or Record Keeping Requirements

• Client attempts to convince employee not to complete any documentation required for the transaction. 
• Client makes inquiries that would indicate a desire to avoid reporting.
• Client has unusual knowledge of the law in relation to suspicious transaction reporting.
• Client seems very conversant with money laundering or terrorist activity financing issues.
• Client is quick to volunteer that funds are clean or not being laundered.

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4.3 Identity Documents

• Client provides doubtful or vague information.
• Client produces seemingly false identification or identification that appears to be counterfeited, altered or inaccurate.
• Client refuses to produce personal identification documents.
• Client only submits copies of personal identification documents.
• Client wants to establish identity using something other than his or her personal identification documents.
• Clients supporting documentation lacks important details such as a phone number.
• Client inordinately delays presenting corporate documents.
•  All identification presented is foreign or cannot be checked for some reason.
• All identification documents presented appear new or have recent issue dates.
  

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4.4 Cash Transactions

• Client starts conducting frequent cash transactions in large amounts when this has not been a normal activity for the client in the past.
• Client frequently exchanges small bills for large ones.
• Client uses notes in denominations that are unusual for the client, when the norm in that business is much smaller or much larger denominations.
• Client presents notes that are packed or wrapped in a way that is uncommon for the client.
• Client deposits musty or extremely dirty bills.
• Client makes cash transactions of consistently rounded-off large amounts (e.g., $9,900, $8,500, etc.).
• Client consistently makes cash transactions that are just under the reporting threshold amount in an apparent attempt to avoid the reporting threshold. 
• Client consistently makes cash transactions that are significantly below the reporting threshold amount in an apparent attempt to avoid triggering the identification and reporting requirements.
• Client presents uncounted funds for a transaction. Upon counting, the transaction is reduced to an amount just below that which could trigger reporting requirements. 
• Client conducts a transaction for an amount that is unusual compared to amounts of past transactions.
• Client frequently purchases travellers cheques, foreign currency drafts or other negotiable instruments with cash when this appears to be outside of normal activity for the client.
• Client asks you to hold or transmit large sums of money or other assets when this type of activity is unusual for the client. 
• Shared address for individuals involved in cash transactions, particularly when the address is also for a business location, or does not seem to correspond to the stated occupation (for example, student, unemployed, self-employed, etc.)
• Stated occupation of the client is not in keeping with the level or type of activity (for example a student or an unemployed individual makes daily maximum cash withdrawals at multiple locations over a wide geographic area). 
  

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4.5 Economic Purpose

• Transaction seems to be inconsistent with the clients apparent financial standing or usual pattern of activities.
• Transaction appears to be out of the ordinary course for industry practice or does not appear to be economically viable for the client.
• Transaction is unnecessarily complex for its stated purpose.
• Activity is inconsistent with what would be expected from declared business.
• Transaction involves non-profit or charitable organization for which there appears to be no logical economic purpose or where there appears to be no link between the stated activity of the organization and the other parties in the transaction.
  

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4.6 Transactions Involving Accounts

• Opening accounts when the clients address is outside the local service area.
• Opening accounts in other peoples names.
• Opening accounts with names very close to other established business entities.
• Attempting to open or operating accounts under a false name.
• Account with a large number of small cash deposits and a small number of large cash withdrawals.
• Funds are being deposited into several accounts, consolidated into one and transferred outside the country.
• Client frequently uses many deposit locations outside of the home branch location.
• Multiple transactions are carried out on the same day at the same branch but with an apparent attempt to use different tellers.
• Activity far exceeds activity projected at the time of opening of the account.
• Establishment of multiple accounts, some of which appear to remain dormant for extended periods.
• Account that was reactivated from inactive or dormant status suddenly sees significant activity.
• Reactivated dormant account containing a minimal sum suddenly receives a deposit or series of deposits followed by frequent cash withdrawals until the transferred sum has been removed.
• Unexplained transfers between the clients products and accounts.
• Multiple deposits are made to a clients account by third parties.
• Deposits or withdrawals of multiple monetary instruments, particularly if the instruments are sequentially numbered.
• Multiple personal and business accounts are used to collect and then funnel funds to a small number of foreign beneficiaries, particularly when they are in locations of concern, such as countries known or suspected to facilitate money laundering activities. More information on which countries these characteristics may apply to can be found at the following Web sites:

  http://www1.oecd.org/fatf/NCCT_en.htm   (information from the Financial Action Task Force about non-cooperative countries and territories in the fight against money laundering and terrorist financing) http://www.state.gov/www/global/narcotics_law/1999_narc_report /index.html    (International Narcotics Control Strategy Report released by the Bureau for International Narcotics and Law Enforcement Affairs, U.S. Department of State, March 2000) http://www.fintrac.gc.ca/publications/avs/2002-12-20_e.asp

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4.7 Transactions Involving Areas Outside Canada

• Client and other parties to the transaction have no apparent ties to Canada.
• Transaction crosses many international lines.
• Use of a credit card issued by a foreign bank that does not operate in Canada by a client that does not live and work in the country of issue.
• Transactions involving countries deemed by the Financial Action Task Force as requiring enhanced surveillance, including the Republic of Nauru.
• Foreign currency exchanges that are associated with subsequent wire transfers to locations of concern, such as countries known or suspected to facilitate money laundering activities.
• Deposits followed within a short time by wire transfer of funds to or through locations of concern, such as countries known or suspected to facilitate money laundering activities.
• Transaction involves a country where illicit drug production or exporting may be prevalent, or where there is no effective anti-money-laundering system. 
• Transaction involves a country known for highly secretive banking and corporate law.
• Transaction involves a country known or suspected to facilitate money laundering activities. 

More information on which countries these characteristics (i.e. those mentioned in the last two bullets) may apply to can be found at the following Web sites: 

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4.8 Transactions Related to Offshore Business Activity

Any person or entity that conducts transactions internationally should consider the following indicators.

• Accumulation of large balances, inconsistent with the known turnover of the clients business, and subsequent transfers to overseas account(s).
• Frequent requests for travellers cheques, foreign currency drafts or other negotiable instruments.
• Loans secured by obligations from offshore banks.
• Loans to or from offshore companies.
• Offers of multimillion-dollar deposits from a confidential source to be sent from an offshore bank or somehow guaranteed by an offshore bank.
• Transactions involving an offshore shell bank whose name may be very similar to the name of a major legitimate institution.
• Unexplained electronic funds transfers by client on an in-and-out basis.
• Use of letter-of-credit and other method of trade financing to move money between countries when such trade is inconsistent with the clients business.
• Use of a credit card issued by an offshore bank. 

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