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Sanctions Evasion Methods Exposed: Red Flags to Watch Out For
A special investigation by [Media Outlet] has uncovered a range of tactics used by individuals and entities to evade sanctions and export controls. These methods, which include routing transactions through high-risk jurisdictions, using shell companies, and concealing ownership, have been identified as key indicators of sanctions evasion activity.
Routing Transactions Through High-Risk Jurisdictions
Sanctions evaders often use intermediary jurisdictions with a history of weak anti-money laundering regulations to hide the source of their funds. These jurisdictions include countries with poor financial transparency and lax enforcement of international sanctions.
- Examples of high-risk jurisdictions: countries with poor financial transparency, lax enforcement of international sanctions
- Warning signs: transactions routed through these jurisdictions may be linked to sanctions evasion activity
Using Shell Companies and Concealing Ownership
Sanctions evaders may establish shell companies or trusts to disguise the true ownership and control of assets and transactions. This can make it difficult for authorities to trace the flow of funds back to their source.
- Examples: shell companies, trusts, nominees
- Warning signs: lack of transparency in company ownership, unusual corporate structures
Virtual Currencies and Alternative Financial Channels
The increasing popularity of virtual currencies, such as cryptocurrencies, has created new opportunities for sanctions evaders to conceal their activities. Transactions involving virtual currencies may be linked to sanctions evasion activity if they involve transactions with addresses in sanctioned jurisdictions or if they are connected to virtual currency exchanges or services located in high-risk jurisdictions.
- Warning signs: transactions involving virtual currencies with addresses in sanctioned jurisdictions, connections to high-risk jurisdictions
- Examples: cryptocurrencies, peer-to-peer lending platforms
Reporting Suspicious Transactions to FINTRAC
Financial institutions and other reporting entities have a critical role to play in detecting and reporting suspicious transactions. If there are reasonable grounds to suspect that a financial transaction is related to sanctions evasion activity, it must be reported to the Financial Transactions and Reports Analysis Centre (FINTRAC).
- What to report:
- Information on the products and services involved in the suspicious transaction
- Details on ownership, control, and structure of entities involved
- Any information about related persons or entities
Contact FINTRAC
For guidance on submitting suspicious transaction reports to FINTRAC, please contact:
Email: guidelines-lingesdirectrices@fintrac-canafe.gc.ca (include Special Bulletin FINTRAC-2024-SB002 in the subject line) Telephone: 1-866-346-8722 (toll free) Facsimile: 613-943-7931 Mail: FINTRAC, 24th Floor, 234 Laurier Avenue West, Ottawa ON, K1P 1H7, Canada
About FINTRAC
FINTRAC is an agency of the Government of Canada responsible for implementing and enforcing various pieces of legislation related to anti-money laundering and counter-terrorism financing. Its mission is to protect the financial system from abuse and support national security by ensuring that the proceeds of crime are not laundered or used to finance terrorism.
Disclaimer
This Special Bulletin is provided as a general guide only and is intended for use by reporting entities subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. It should not be considered legal advice, and reporting entities should consult with legal counsel if they have any questions or concerns about their obligations under this legislation.
Date Modified: 2024-06-25