Pubdate: Sat, 02 Sep 2006
Source: Prince George Citizen (CN BC)
Copyright: 2006 Prince George Citizen
Contact:  http://www.princegeorgecitizen.com/
Details: http://www.mapinc.org/media/350
Author: Frank Peebles, Citizen staff
Bookmark: http://www.mapinc.org/mjcn.htm (Cannabis - Canada)
Bookmark: http://www.mapinc.org/coke.htm (Cocaine)
Bookmark: http://www.mapinc.org/find?188 (Outlaw Bikers)

COMING CLEAN WITH DIRTY CASH

Prince George is the regional centre for the production and 
trafficking of drugs and local authorities say that means money 
laundering is also big business locally.

"More than a few times, we have had cash deposited here and the money 
smells like pot," said Linda Sowles, risk management officer for 
Integris Credit Union.

But she said the signs of dirty money are not usually that obvious. 
"We had an individual who was in the news for being busted at the 
border with illegal substances, and he had an account with us," she 
said. "Sometimes you put it together that way. We search our database 
to see if we have known Hells Angels on file, or different things 
like that. Sometimes just a name in the newspaper will trigger us to 
search for them to see if they are doing business with us now or in 
the past. We don't want to be the organization used to filter their 
criminal money."

Cpl. Dennis Blommaert, of the RCMP's integrated proceeds of crime 
section, was in Prince George recently as a guest of the Chamber of 
Commerce. He told a large gathering of mostly bankers, accountants 
and other money handlers that the two words allow money laundering to 
take place in this community -- willful blindness.

"If you don't ask those questions, when people bring you large 
amounts of money, if you don't follow up on those red flags, you are 
being willfully blind," Blommaert said. "If you are willfully blind, 
you become a money launderer and you also can be charged criminally."

Police don't want to see otherwise legitimate businesses - most of 
the time they are car dealerships, boat dealers, jewelers, investment 
brokers, real-estate agents, financial institutions -- fall under the 
cloud of organized crime. It is the Hells Angels, the Asian gangs, 
the East Indian gangs, the Italian and Russian mafia groups, and 
other criminal organizations from across Canada that spearhead money 
laundering in B.C.

Rather than waving the big stick of legislation, police point out a 
major weapon money launderers bludgeon the law-abiding business 
community with: unfair competition. Money launderers don't just buy 
big-ticket items and make circular investments to try to make their 
dirty millions look clean, they will also set up stores and 
restaurants in order to channel their money.

"When you start up your little business, you go to the bank to get 
loans, you hire the best staff you can afford, your family works long 
hours to make the business a go, but down the street you have the 
same business going against you with the best equipment, the best 
staff, the best location, and they don't really care if they make a 
profit," because they are only a front for criminals to dump their 
proceeds of crime into so it comes out the other end looking clean, 
Blommaert explained.

"They got the money selling drugs, but it all looks like legitimate 
corporate money now, and your business goes bankrupt because you 
can't compete."

The process isn't usually sophisticated, with only two or three 
layers of cover before the money's dirty origins are revealed. Of 
course, for reasons of privacy and confidentiality that protect us 
all, law enforcement needs all kinds of warrants and legal standing 
to look into clean money. Blommaert said most investigations start at 
the other end. If they can pinpoint the drug industry players, they 
can more effectively trace their dealings forward and take down the 
money laundering infrastructure as the money moves.

"First we will find out what asset the suspect has, then find out 
where it came from, what kind of banking has been done, and follow it 
along from there," Blommaert said.

"They aren't always complicated," said Beau Doherty, a researcher for 
the RCMP's merchants against money laundering program. "A lot just 
take the drug money and buy big-ticket items, so they have assets 
instead of cash. Some might go so far as to set up a company and buy 
things in the name of the company, so there is another level of 
cover. Some take over legitimate businesses with high-volume cash 
transactions like restaurants, bars, private ATM machines, etc."

The majority of drug business in B.C. is marijuana sold in enormous 
quantities in the United States in exchange for cash (sometimes 
cocaine and guns). Of course American customers use primarily American cash.

In order to convert the U.S. currency into Canadian currency, crooks 
must use banks or money exchanges. In the Lower Mainland and 
Victoria, money exchanges are common and are often very small 
operators. Crooks and their associates will literally wheel shopping 
carts full of cash in, flip it all to Canadian funds, and disappear 
again with no idea who they were. Doherty said one B.C. marijuana 
merchant was flipping $1-million per week in this fashion before 
police caught him.

Undercover operations are constant against such launderers in the 
Vancouver and Victoria area, according to police.

The goal is always to catch Papa Smurf. Crooks have coined the phrase 
"smurfing" to describe the most common form of money laundering in 
B.C. Papa Smurf is the boss, and under that are all the smurfs that 
will take the dirty cash in small amounts - always less than $10,000 
for a very important reason - to banks and other financial 
institutions. Each smurf may visit six or eight banks in a day, and 
there may be five or six smurfs working for Papa Smurf. They bring 
bank drafts or prepaid credit cards back and, viola, dirty money now 
looks clean with no suspicions aroused.

No matter what the scheme, no matter if it is a smurf doing the dirty 
work, or the crook's lawyer, or wife, or Papa himself standing in 
your business, it is up to the law-abiding proprietor to blow the 
whistle on this kind of activity, Blommaert said.

"Every business is a local business to the people coming in the door 
off the street. Get to know your customers," Blommaert said. "Ask 
them questions, learn about them, find out about the transactions 
they are doing with you. There are signs most money launderers will 
show. Are they reluctant to show you their ID? Are they making 
purchases in a nominee's name? Do they have difficulty explaining the 
source of their income? Are they paying cash for big-ticket items or 
investments? Are they outside the profile for such items? Do they 
seem unconcerned by the price? Even if they offer an explanation, did 
you have some kind of feeling that something wasn't quite right?"

If any of these things come to mind about someone, Blommaert said at 
the very least the transaction should be reported to FINTRAC. FINTRAC 
is an independent agency, arm's length from police and government, 
responsible for the collection, analysis and disclosure of 
information that may assist law enforcement and national security 
officials curb money laundering.

Anyone can make that report, and financial institutions and certain 
money-handling businesses are required to.

Sowles said FINTRAC has some drawbacks. It is bureaucratic in nature, 
reports have to be filed on some transactions the bank knows full 
well are legitimate, and even if there are suspicions and a report is 
filed, they never hear back what the results were because the police 
work is secret and sometimes takes years to investigate.

"It is a lot of work for us, and we don't see the end result. We are 
not privy to what goes on after we report to FINTRAC," she said. 
"There are benefits for the community at large, though, it is to 
protect the public. And we certainly don't want to be aiding and 
abetting these criminal organizations, which we know for a fact are 
operating in Prince George. We don't want to be seen as a target by 
criminal organizations. There is a list of suspected terrorists that 
we are regularly provided with and we have to report monthly that we 
have checked to ensure we are not dealing with that long list of 
names. I take that seriously. I do believe it could absolutely happen 
in Prince George, and drug money is definitely running through this 
town," Sowles said.

Money laundering can have devastating social consequences, according 
to police. It allows the drug trade to flourish. It buys guns and 
heavy weapons for drug traffickers, arms dealers, terrorists and 
other criminals. It allows local criminals to make a living and enjoy 
luxuries they gained by hurting and demoralizing local people.

Investigations have shown that criminals manipulate financial systems 
in Canada and abroad to support their illicit activities. The 
International Monetary Fund estimates global money laundering to be 
between two and five per cent (half a trillion dollars total) of the 
world's gross domestic product. Money laundering in Canada alone is 
estimated to be in the billions of dollars. Blommaert estimated the 
British Columbia drug industry to be, conservatively, between $7 
billion and $10 billion per year, and all that money has to somehow 
get circulated into the legitimate economy.

"We, the legitimate people in town, are scratching to make ends 
meet," Blommaert said. "If we want to be crooks, we can be crooks, 
but you run the risk of a knock at the door late at night and there's 
a guy with a shotgun saying 'all your stuff is now mine.' You want 
safety for your children, you want a healthy lifestyle, you don't 
want to be worrying about drug addiction and violence in your 
neighbourhood. To ensure that, you have to take the profit out of 
crime, and that is done by calling it in when suspicious things 
happen. Do not be willfully blind or you are, like it or not, part of 
the problem."

Blommaert and others are touring the province to teach businesses 
about money laundering and how it works. For more information call 
604-264-3178.

+++++++ INFO BOX +++++++++++++++

Money Laundering Methods

* Structuring ("smurfing"): Smurfing is possibly the most commonly 
used money laundering method. It involves many individuals who 
deposit cash into bank accounts or buy bank drafts in amounts under 
$10,000 to avoid the reporting threshold.

* Bank Complicity: Bank complicity occurs when a bank employee is 
involved in facilitating part of the money laundering process.

* Money Services and Currency Exchanges: Money services and currency 
exchanges provide a service that enables individuals to exchange 
foreign currency that can then be transported out of the country. 
Money can also be wired to accounts in other countries. Other 
services offered by these businesses include the sale of money 
orders, cashiers cheques, and travellers cheques.

* Asset Purchases with Bulk Cash: Money launderers may purchase high 
value items such as cars, boats or luxury items such as jewelry and 
electronics. Money launderers will use these items but will distance 
themselves by having them registered or purchased in an associate's name.

* Electronic Funds Transfer: Also referred to as a telegraphic 
transfer or wire transfer, this money laundering method consists of 
sending funds electronically from one city or country to another to 
avoid the need to physically transport the currency.

* Postal Money Orders: The purchase of money orders for cash allows 
money launderers to send these financial instruments out of the 
country for deposit into a foreign or offshore account.

* Credit Cards: Overpaying credit cards and keeping a high credit 
balance gives money launderers access to these funds to purchase high 
value items or to convert the credit balance into cheques.

* Casinos: Cash may be taken to a casino to purchase chips which can 
then be redeemed for a casino cheque.

* Refining: This money laundering method involves the exchange of 
small denomination bills for larger ones and can be carried out at a 
number of different banks in order not to raise suspicion.

* Value Tampering: Money launderers may look for property owners who 
agree to sell their property, on paper, at a price below its actual 
value and then accept the difference of the purchase price "under the 
table." The launderer can, for example, purchase a $2-million dollar 
property for $1-million, while secretly passing the balance to the 
seller. After holding the property for a period of time, the 
launderer then sells it for its true value of $2-million.

* Loan Back: Using this method, a criminal provides an associate with 
a sum of illegitimate money and the associate creates the paperwork 
for a loan or mortgage back to the criminal for the same amount. This 
creates an illusion that the criminal's funds are legitimate. The 
scheme's legitimacy is further reinforced through regularly scheduled 
loan payments made by the criminal, and providing another means to 
transfer money.

++++ FINTRAC INFO BOX +++++

FINTRAC - The Financial Transactions and Reports Analysis Centre of Canada

FINTRAC now administers the Proceeds of Crime (money laundering) and 
Terrorist Financing Act enacted by Parliament following the terrorist 
attacks of September 11. The new act gives FINTRAC the authority to 
receive voluntary information from the public, law enforcement 
agencies, and others about suspicions of terrorist financing.

Who must report to FINTRAC?

All financial entities, life insurance companies, securities dealers, 
foreign exchange outlets and money service businesses, which have 
detected a suspicious transaction, or conducted cash transactions or 
wire transfers in/out of Canada worth $10,000 and over. Records 
related to these transactions must be kept for a period of five years.

Why report to FINTRAC?

If there are reasonable grounds to suspect that a transaction is 
related to a money laundering or terrorist financing offence, the law 
requires that a report be filed with FINTRAC.

How to file a report:

FINTRAC has a new reporting system called F2R.

Email: Telephone: 1-866-346-8722 (After making your language choice, press 1.)

Information on FINTRAC can be found online at http://www.fintrac.gc.ca

If you suspect money laundering, Report it.

Disclosure provisions under Section 462.47 of the Criminal Code of 
Canada justify you to do this. Under the law, whistle blowers will be 
protected from any civil or criminal liability, even if your 
suspicions prove to be wrong.

What They Need From You

When contacting police or FINTRAC concerning a suspicious 
transaction, you may be asked to provide specific information, such as:

1. Date, time, and location of the transaction.

2. Name, age, address, telephone number, description of the person(s) 
involved in the suspicious transaction and their associates.

3. The amount of the suspicious transaction.

4. Bank, credit card, or other personal information about the subject 
that might be available.

5. Description of vehicle and licence plate number associated with 
the suspicious transaction/activity.

6. The circumstances, details, and events that raised your suspicion.

7. The type of activity associated with the suspicious transactions 
(payment made by an unusually large volume of cash, use of nominees 
(associates), currency exchanged, smurfing, refining, undervaluing 
goods, loan backs).
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MAP posted-by: Beth Wehrman