Roundup – March 2017

Customer not present (CNP) onboarding is rapidly becoming a staple in the client acquisition strategy of most financial institutions

FINTRAC’s minimum requirements for CNP identity verification allow organizations to solve part of the digital onboarding challenge – ie, confirming that the applicant is a real person. To truly manage risk, financial institutions must extend beyond verification to authentication –confirming the applicant is in fact who they say they are. Ensuring your AML identity verification tools also include protection against identity fraud will allow you to reap the benefits of a digital customer experience while minimizing the inherent financial risk. Read the full article here.

Real estate market frenzy in major Canadian cities an indicator of money laundering activity

There has been much discussion around the role of foreign investment in the red hot real estate markets of major Canadian cities. While the presence of cash-flush buyers can be exciting to many Canadian homeowners looking to maximize the value of their assets, the nature of the real estate transaction creates risk for money laundering.

Foreign politically exposed persons (PEPs) and criminals looking to integrate their gains appreciate the relative safe, high-value assets that can be purchased for cash. Shell companies can be used  to mask the parties involved, and the various intermediaries – lawyers, realtors and mortgage brokers, can further serve to obfuscate the true source of funds. Validating the beneficial ownership of purchasers by all professionals in the transaction helps to preserve the integrity of the real estate market. Read the full article here.

Money laundering watchdog scrutinizes Facebook, social media

Following the lead of the Canada Revenue Agency, FINTRAC has revealed that investigations into potential money laundering and terrorist financing may involve the review of social media sites, such as Facebook, under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.  There are concerns that such practices are in violation of privacy rights, however, the CRA and FINTRAC are only accessing publicly available information to assist in their investigations into fraud and anti-money laundering.

Social media users are not always savvy enough to protect their feeds and posts from public consumption, but neither agency is violating privacy rules sourcing information from the public domain, even if the intention behind the post was private.  While money laundering continues to grow internationally and domestically, there may come a time when FINTRAC’s mandate crosses into the domain of privacy protection. Read the full article here.

Is a register of beneficial ownership of companies coming?

The G20 has made varying commitments to establish the policies and enforcement required to affect global transparency on beneficial ownership for legal entities and trusts in a growing effort to stem the flow of dirty money globally.  The challenges are formidable and begin at the point of customer acquisition, where beneficial ownership information and attestation are the first step to ensuring anti-money laundering and anti-terrorist funding are not reaching the global market.

Whatever else the G20 hopes to move forward, in terms of data collection and sharing across the globe, this critical first step must be standard practice for all financial institutions and money service businesses. Read the full article here.