Financial Crime World

FINTRAC Issues Guidance on North Korean Financial Transactions

Operational Alert Provides Indicators and Jurisdictions Associated with Sanctions Evasion by the Democratic People’s Republic of Korea

Ottawa, Canada - The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued an operational alert to provide guidance to reporting entities on indicators and jurisdictions associated with the use of the international financial system for laundering the proceeds of sanctions evasion by the Democratic People’s Republic of Korea (DPRK).

Identifying Suspicious Transactions

According to FINTRAC, transactions involving front or shell companies, particular jurisdictions, and other suspicious activities may be indicative of money laundering or terrorist financing offences related to the DPRK. The alert highlights several characteristics that may indicate the use of front or shell companies by North Korean entities and individuals, including:

  • A lack of online presence
  • Generic corporate names
  • One-directional transaction patterns
  • Frequent changes in foreign ordering companies

Jurisdictions Warranting Additional Scrutiny

FINTRAC also notes that transactions to or from certain jurisdictions, including:

  • Liaoning Province, China
  • Jilin Province, China
  • Hong Kong

may warrant additional scrutiny. While these jurisdictions are not inherently high-risk, transactions originating from or destined for these areas combined with other indicators may be considered elevated risk.

Reporting Obligations

Reporting entities subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) are reminded of their obligations to submit suspicious transaction reports or attempted suspicious transaction reports if they have reasonable grounds to suspect that a transaction is related to a terrorist activity financing or money laundering offence.

Building High-Quality Suspicious Transaction Reports

FINTRAC encourages reporting entities to build and maintain training programs to ensure the submission of high-quality suspicious transaction reports. The Centre will use these indicators, along with other sources of information, to assess compliance with reporting obligations.

Contact FINTRAC

If you have any questions or would like more information on this guidance, please contact FINTRAC at:

INDICATORS OF ML/TF RELATING TO DPRK

  • Transactions involving front or shell companies with characteristics such as:
    • Lack of online presence
    • Generic corporate names
    • One-directional transaction patterns
    • Frequent changes in foreign ordering companies
  • Transactions to or from certain jurisdictions, including:
    • Liaoning Province, China
    • Jilin Province, China
    • Hong Kong