Financial Crime World

FINTRAC Warns of North Korean Financial Activity in Canada

January 2019 - Operational Alert from FINTRAC

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued an Operational Alert to remind reporting entities subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) of their obligations to report suspicious transactions related to North Korean financial activity.

Indicators of Suspicious Transactions

According to FINTRAC, there are several indicators and jurisdictions that may be associated with North Korean use of the international financial system for laundering the proceeds of sanctions evasion. These include:

  • Transactional patterns where the same observed activity and Canadian recipients remain consistent, but the foreign ordering company changes over time.
  • Transactions to or from specific Chinese provinces, such as Liaoning, Jilin, and Hong Kong.

Jurisdictions of Concern

FINTRAC has identified three Chinese provinces as being of particular concern:

Liaoning Province

  • Companies and financial institutions have been reported to engage in financial activity and business dealings with North Korean companies and China-based front companies.
  • The province shares a land border with North Korea and has a substantial amount of Canada-linked EFT reporting to several cities, including Dalian and Shenyang.

Jilin Province

  • Associated with North Korean financial activity, particularly in the food processing and manufacturing sectors.
  • There is a substantial amount of EFT reporting to Changchun, the capital of Jilin province.

Hong Kong

  • Identified as a major centre of global finance and transactions to or from this jurisdiction may warrant additional scrutiny, particularly if they display other indicators such as possible use of shell companies.

Reporting Obligations

FINTRAC is reminding reporting entities that while not specifically high-risk in and of themselves, transactions originating from or destined for these jurisdictions should be considered at elevated risk when combined with other indicators. In such cases, where reporting entities reach the threshold of reasonable grounds to suspect, they should file:

  • Suspicious transaction reports
  • Attempted suspicious transaction reports

Contact Information

If you have any questions or concerns regarding this Operational Alert or your obligations under the PCMLTFA and its associated Regulations, please contact FINTRAC at: