Federal Intelligence Agency reports signs of mounting domestic terror financing
21st December 2022 – In its latest release, Fintrac has hinted at signs that indicate that terror financing was ‘primarily focused on domestic terrorism, the financing of international terrorist groups and Canadian extremist travelers’.
Fintrac, short for Financial Transactions and Reports Analysis Centre of Canada, is a federal financial intelligence unit which facilitates the detection, prevention and deterrence of money laundering and financing of terrorist activities.
The strategic analysis of financial intelligence disclosures done between 2019 and 2022 reveals that whereas the target of terrorism was in Canada, the transactions were ideologically motivated violent extremism (IMVE) and involved lone actors, cross-border networks and organized groups, including the ones which have already been banned in Canada. At the moment, there are 77 such listed entities.
Lone actors tend to be self-funded, often by payroll or government assistance deposits and cash deposits. Cross-border networks majorly use large money services businesses (MSBs) to remit funds. Organized groups generate financing through various means including electronic transfers, sale of property or other merchandise and regular cash deposits.
In past one year, Fintrac disclosed 2,292 transactions that supported intelligence investigations related to money laundering, terrorist activity financing and threats to the security of Canada. The Centre found that transactions relating to the financing of international terrorist groups consisted primarily of outgoing funds transfers to another country – particularly to jurisdictions of concern for terrorist activity financing. The jurisdictions of concern most frequently seen in the sampled disclosures included: Iraq, Lebanon, Pakistan, Syria, Turkey, United Arab Emirates, and Yemen.
Of the analyzed disclosures, the most frequently identified international terrorist entity was Daesh, followed by Hizballah. A large portion of the funds suspected of supporting Daesh were sent to Turkey, often to regions or towns close to the Turkey-Syria border, Fintrac found. A large portion of funds suspected of funding Hizballah were sent to Lebanon. Funds suspected of funding Hizballah were frequently sent or received by individual/entities referencing sale of cars or listed in the automotive industry, Fintrac noted.
Fintrac has revealed that there are five phases of dubious financial transactions in case of Canadian Extremist Travelers (CETs). The five phases are:
- Pre-departure – this is where the CET empty their bank accounts before travel;
- En-Route – CET typically does lot of credit or debit transactions in travel corridors once they are en-route to their destination;
- In-Theatre – the accounts remain dormant while the CET is on travel;
- Returning – the dormant accounts started getting funds upon return. Most of these deposits are huge from parties not known to CET and a justifiable reason is hard to find;
- Interrupted Travel – this is when the CET’s travel has been interrupted by law enforcing agencies
In the year 2021-2022, Fintrac conducted 259 compliance examinations, of which 96 were in the real estate, 89 in MSBs and 34 in securities dealers. During the same period, eight notifications for the value of over $1.5 million were done in real estate, four for the value of over $1.6 million in financial entity, and two for the value of over $ 70,000 in MSBs.
For the full report, please click here.