Canada’s FINTRAC warns of crypto’s role in drug money laundering

The Financial Transactions and Report Analysis Centre of Canada (FINTRAC) revealed that cryptocurrencies are being used to launder money from synthetic fentanyl and opioid trafficking.

According to the agency, crypto is now an accepted payment between drug-dealing producers and brokers. Moreover, virtual currency addresses are typically hosted in a centralized crypto exchange.

FINTRAC believes digital assets are being used in wire transfers for chemicals and other services

FINTRAC released updated client risk factors and indicators related to synthetic opioid trafficking and production.

The financial intelligence company found that virtual currencies are used to launder illicit proceeds. Its January 23 report revealed that chemical producers send payments to brokers through wire transfer, and sometimes, crypto is the preferred payment method. Not to mention, most crypto addresses are hosted on centralized exchanges. 

Moreover, for chemical shipments, warehouses, third-party logistics areas, and storage lockers are typically leased through credit card payments, crypto or cash wire transfers, or email money transfers before they are transported to drug labs for opioid production.

FINTRAC gave a number of virtual currency indicators for opioid money laundering

The agency’s report also listed several crypto-related laundering indicators to help reporting entities analyze and assess suspicious financial transactions. Some of the indicators the agency wants them to look out for are when clients send or receive virtual currency addresses tied to darknet marketplaces like Blackprut, ASAP, and Mega Darknet or when a client opens a virtual currency account and makes transactions with persons associated with organized crime or drug trafficking. 

FINTRAC also believes that it’s worth looking into individuals sending or receiving crypto mixing or tumbling services unusual for their profile or those making cash purchases of virtual currency and immediately transferring the funds to a private wallet or deposit address at an exchange. 

Additionally, it mentioned clients constantly appearing in online forums such as Reddit or Bitcoin Talk or those transacting with anonymous mailing services such as cryptostamps and btcpostage as risk factors.

Law enforcement agencies were also asked to check on clients interacting with addresses on the blockchain that are known to be associated with illicit or suspicious services.

The agency also encouraged these reporting entities to include these risk factors in their anti-money laundering strategies and encouraged collaboration across the crypto ecosystem to fight drug money laundering.

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