Audit of the Financial Transactions and Reports Analysis Centre of Canada - page 11

Observations and Recommendations
25. Similarly, we found international Electronic
Funds Transfer Reports and Canada Border
Services Agency (CBSA) cross border currency
and monetary instruments reports that did not
meet the $10,000 reporting threshold.
26. In addition, we identified STRs where there
was no reasonable grounds to suspect money
laundering or terrorist financing activities; see
examples below in Exhibit A. In each case, a
report was sent to FINTRAC and FINTRAC
retained the report in its database.
Exhibit A – Examples of excessive
reporting to FINTRAC
• A young professional cashed three bank
drafts worth almost US$ 100,000 purchased
from a major Canadian bank. The issuing
bank confirmed the validity of the drafts.
The manager of the Money Services Business
where the drafts were cashed obtained
satisfactory answers to various questions
on the transaction but filed a Suspicious
Transaction Report (STR) with the explana-
tion that “
the amount of money simply
did not match his age.
• An individual, who purchased a home from
his childhood friend, released the deposit
directly to the seller instead of to the seller’s
lawyer. The notary who reported the
transaction stated: “
this is a long time client
of mine and I have no reason to suspect
money laundering or terrorist activity but
as I was not sure whether the following
(as described above) needed to be reported
or not, I thought it best to do so.
• An individual wanted to exchange
to Canadian currency. The STR stated that
in order to dissuade the individual from
completing the transaction, the individual
was informed that the full amount would
be frozen for 21 days. The report further
stated that the client decided not to proceed
with the transaction.
27. We also noted that a number of reports did not
include the entity’s reason for suspected money
laundering or terrorist financing activities. The
absence of such information renders it difficult
to assess whether the “reasonable grounds”
threshold has been met. Examples of such
reports are provided below in Exhibit B:
Exhibit B – Examples of reports lacking
reasonable grounds for suspicion
• A financial institution filed an STR when a
storekeeper deposited $570 in $100, $50
$20 and $5 bills without indicating why
the transaction was considered suspicious.
• A jackpot worth $10,000 was won but was
not awarded due to the winner not having
photo identification at the time it was
claimed. An STR was filed by the casino.
28. FINTRAC’s guidelines state that an individual’s
provincial health card may be used as identifica-
tion, but only if it is not prohibited by provincial or
territorial legislation. The guidelines also provide
that although the Social Insurance Number (SIN)
can be used to verify the identity of a client, the
number is not to be provided to FINTRAC on any
type of report. Notwithstanding this guidance, we
found instances where FINTRAC received and
retained SINs and certain health card numbers in
some reports we examined.
29. FINTRAC has implemented a front-end screening
system to ensure all mandatory fields are completed
in reports when submitted electronically. When
such fields are incomplete, the reports are
returned to the reporting entity. All other
reports and records are accepted regardless
of whether the monetary reporting threshold
is met, or there are reasonable grounds to
suspect money laundering or terrorist financing
activities. FINTRAC indicated in the event that
one of its analysts notes a report that does not
meet the various reporting thresholds specified
in the PCMLTFA, the report is segregated.
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