Rise in Suspicious Financial Transactions Raises Concerns in UAE and Hong Kong

Money Laundering and Sanctions Evasion Suspected

A recent report by FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) has highlighted a sudden surge in financial transactions linked to Russian financial flows, raising concerns among authorities about money laundering and sanctions evasion.

Unexplained Value Transfers from UAE and Other Jurisdictions

According to the report, accounts with financial institutions in the United Arab Emirates (UAE) and other jurisdictions have seen a significant increase in value transfers without a clear economic or business rationale. This has raised suspicions that these transactions may be linked to money laundering activities.

Real Estate Transactions Used for Money Laundering

The report also highlights the use of real estate transactions as a means to launder money, particularly in the UAE and Turkey. Since Russia’s invasion of Ukraine, there has been an uptick in the number of Russia-linked individuals and entities using real estate transactions for money laundering purposes.

Virtual Currencies and Alternative Financial Channels Used for Illicit Activities

In addition, the report notes that the use of virtual currencies and other alternative financial channels may also be playing a role in Russia-linked illicit financial flows. Criminals and criminal organizations may be using cryptocurrencies to obfuscate the source of the proceeds of crime and integrate them into the traditional financial system.

Characteristics of Suspicious Russia-Linked Virtual Currency Transactions

Some potential characteristics associated with suspicious Russia-linked virtual currency transactions include:

Transactions initiated from or sent to IP addresses in Russia, Belarus, or other jurisdictions with weak anti-money laundering regulations
Connections to virtual currency addresses linked to sanctioned entities or individuals
Use of unlicensed brokers to off-ramp cryptocurrency to unknown third parties

The report also notes that open-source analysis of cryptocurrency transactions indicates that Russian entities and individuals represent a disproportionate share of cryptocurrency-enabled crime, including online fraud and ransomware.

Steps to Combat Illicit Activities

To combat these illicit activities, financial institutions are encouraged to:

Know their customers and monitor transactions for suspicious activity
Submit suspicious transaction reports to FINTRAC if there are reasonable grounds to suspect that a financial transaction is related to the commission or attempted commission of an ML/TF (money laundering and terrorist financing) offence

Contact FINTRAC for Guidance

For guidance on submitting suspicious transaction reports, please visit FINTRAC’s website.

Email: guidelines-lignesdirectrices@fintrac-canafe.gc.ca

Telephone: 1-866-346-8722 (toll free)

Facsimile: 613-943-7931

Mail: FINTRAC, 24th Floor, 234 Laurier Avenue West, Ottawa ON, K1P 1H7, Canada