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A Preventive Guide for Small Business & Currency Exchanges in Canada
One of the RCMP's roles within Canada's Initiative to Combat Money Laundering is to inform the public. To most businesses, money laundering is something that happens somewhere else, involving only criminals. The truth is, it can happen anywhere, anytime, and you may not even be aware that you have been involved. Money laundering is the process whereby criminals conceal illicit funds by converting them into seemingly legitimate income. While the term refers to the monetary proceeds of all criminal activity it is most often associated with the financial activities of drug traffickers who seek to launder large amounts of cash generated from the sale of narcotics. The RCMP Proceeds of Crime (POC) program's mandate is to identify, assess, restrain and forfeit illicit and/or unreported wealth accumulated through criminal activities. Most of the POC sections work under an integrated model. These Integrated Proceeds of Crime (IPOC) Units bring together the skills, knowledge, and abilities of a diverse group of experts, including RCMP, provincial and municipal police investigators, lawyers from the Department of Justice, forensic accountants, representatives from Canada Revenue Agency, and customs officers from the Canada Border Services Agency (CBSA). It is important for businesses of every kind to be informed about how they can be used to launder money, and how they can help to make it more difficult for criminals to prosper. We recommend you review this booklet to ensure that you are aware of the problem. Index
This booklet gives members of the business community an overview of money laundering in Canada, and information on how to avoid becoming unknowingly involved in this activity. In the pages ahead, you will read about some of the methods used by money launderers, and how you and your business can unwittingly become a part of this illegal activity. Organized criminals, in particular drug traffickers, generate large amounts of cash which they must convert and legitimize in order to benefit from, and further finance their illegal activity. This is called money laundering. One method is to place illegal cash into the financial system through the business community. Money launderers and criminal organizations are not concerned with the regulatory and competitive environment in which Canadian businesses function and will exploit this system for their own criminal purposes. Cooperation from the business community goes a long way to ensure law enforcement agencies are successful in the fight against money laundering. I hope you will read this booklet with great interest and remember to communicate with the nearest Integrated Proceeds of Crime Unit when you are suspicious of a financial business transaction. Supt. Jacques Désilets Why criminals want to "launder" proceeds? 1) to increase profits The principal objective of money laundering is to convert cash into some other form of asset in order to conceal its illegal origins. A criminal group's efforts to launder the proceeds from their crimes may come to your attention at any stage of its placement, layering or integration into the financial system.
"… wilful blindness arises where a person who has become aware of the need for some inquiry declines to make the inquiry because he does not wish to know the truth. He would prefer to remain ignorant. The culpability [in wilful blindness]… is justified by the accused's fault in deliberately failing to inquire when he knows that there is reason for an inquiry." R. v. Sansregret (1985) 45 CR (3d) 193 Example of wilful blindness: A salesperson encounters a customer who wants to buy a consumer good or service with $25,000 cash. The customer produces a gym bag containing $25,000 in $20 and $50 bills. In the vast majority of modern Canadian commerce, this is not a normal business transaction, and this method of payment is highly unusual. Though the salesperson instantly suspects something is out of the ordinary, they chose to ignore their suspicion so as not to jeopardize an easy sale. By ignoring such key money laundering indicators, an individual may have directly participated in an illegal process. Preventive strategies for small and medium businesses When dealing with your customers, ask yourself these questions:
If in doubt, there may be a possibility that your customer is using your business to launder money. Record keeping requirements for small and medium businesses The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires that a report be filed with the Financial Transactions and Reports Analysis Centre (FINTRAC). FINTRAC receives, analyzes, assesses and discloses financial intelligence on suspected money laundering, terrorist financing, and threats to the security of Canada. Who must report to FINTRAC? What information should be reported? When to file a report: Why report to FINTRAC? How to file a report: Impact of money laundering on society The proceeds from crime that creep into the Canadian economy are staggering and affect all levels of society. Money laundering can have devastating social consequences. Laundered funds provide financial support for drug traffickers, terrorists, arms dealers, and other criminals to operate and expand their operations. Investigations reveal that criminals manipulate financial systems in Canada and abroad to support a wide range of illicit activities. For example, drug trafficking alone generates billions of dollars in illicit funds for criminal organizations every year. Businesses supported by the proceeds from crime create unfair competition and can bankrupt legitimate competition in the market. If you suspect money laundering, Report it. Disclosure provisions under Section 462.47 of the Criminal Code of Canada justify you to do this. This section ensures that when you file a report you will be protected from any civil or criminal liability, even if your suspicions prove to be wrong. Call your nearest RCMP Proceeds of Crime Unit if you suspect illegal money transactions. When contacting a Proceeds of Crime Unit concerning a suspicious transaction, you may be asked to provide specific information, such as:
Partners in identifying the proceeds of crime Every year police investigations are launched as a result of information provided by members of the community. Law enforcement personnel consider this information vital to identify suspected money launderers. One single indicator does not prove that a suspicious transaction is money laundering. A criminal or money launderer is typically identified from a combination of facts and events. When you are suspicious of activities that may be connected to money laundering, you should inform your management and/or a law enforcement agency. Getting a second opinion can help you decide whether the activity is in fact money laundering. Please report any suspicious business transactions, people, or organizations to your local RCMP detachment or any other local policing agency. This booklet is available from the Royal Canadian Mounted Police Proceeds of Crime Unit nearest you. Published by the Royal Canadian Mounted Police, Proceeds of Crime Branch (2006). See also: Proceeds of Crime |
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