Is your client a terrorist?

The government’s anti-terrorist financing rules are designed to deprive terrorists of the financial backing they need to pursue their objectives.

Those rules deputize financial institutions to report nefarious activities, including money laundering, to our financial intelligence agency, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

FINTRAC has released a list of red flags to help those on the client-facing front lines of the financial sector identify transactions that could indicate terrorist financing at work. Any one of these indicators may seem insignificant on its own, but, combined with others, may be reasonable grounds to suspect the transaction is terrorism-related.

• Client accesses accounts, and/or uses debit or credit cards, in high-risk jurisdictions; specifically, countries (and those adjacent) under conflict and/or political instability, or known to support terrorism.
• Client has been identified by media or law enforcement as having travelled, or attempted to travel, to high-risk jurisdictions.
• Client made travel-related purchases (airline tickets, travel visa, passport, etc.) linked to high-risk jurisdictions.
• Client mentions he or she will be travelling to, is currently in, or has returned from a high-risk jurisdiction.
• Client depletes accounts through cash withdrawal.
• Client or account activity indicates the sale of personal property with no indication of replacement. For instance, there would be more cause for concern if the client didn’t move to rental or other accommodations, and/or there are no transactions that indicate this (e.g., a cheque to a landlord).
• Client supports violent extremism or radicalization through online postings.
• Client communicates a planned cease date to account activity.
• Client utters threats of violence that have national security implications.
• Client’s debts are suddenly paid off by an unrelated third party.
• Law enforcement officials communicate that the client may be relevant to a law enforcement or national security investigation.
• Client’s transactions involve persons or entities identified by media or law enforcement as subjects of terrorist financing or national security investigations.
• Client donates to a cause (crowdfunding initiative, charity, NPO, NGO, etc.) that media or other publicly available information suggests is linked to terrorism.
• Client makes uncharacteristic purchases of camping equipment, weapons, ammonium nitrate, hydrogen peroxide, acetone, propane, et cetera.
• Client has a large number of email exchanges with unrelated third parties.
• Client provides multiple variations of name, address, phone number or other identifiers.
• Client suddenly converts financial assets to a virtual currency exchange or virtual currency intermediary that allows for increased anonymity.

by Peter Zimmerman, senior manager, MNP National Anti-Money Laundering Practice & Financial Services Regulatory Compliance.