Canada Issues Alert On Cryptocurrency's Role In Opioid Money Laundering

According to Cointelegraph, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued an alert emphasizing the involvement of cryptocurrencies in laundering proceeds from synthetic fentanyl and opioid trafficking. On January 23, FINTRAC, Canada's national financial intelligence agency, released updated client risk factors and indicators related to synthetic opioid trafficking and production. This initiative aims to combat the laundering of illicit funds associated with the country's drug issues.

The alert, titled "Laundering the Proceeds of Illicit Synthetic Opioids," serves as an update to a 2018 version, incorporating new risk factors derived from analyses of financial intelligence, transactions, publications, and law enforcement reports. FINTRAC highlighted the growing role of cryptocurrency in laundering illicit gains from synthetic opioid sales and identified several red flags to aid law enforcement agencies in enhancing vigilance within the crypto sector. These red flags include significant crypto-to-fiat conversions involving newly created accounts that use multiple virtual wallets to obscure transaction origins before funds are cashed out or transferred internationally. Agencies are also advised to monitor deposits into cryptocurrency exchanges from accounts linked to high-risk regions or previously flagged for suspicious activity.

This alert is part of Canada's participation in the North American Drug Dialogue and is a result of Project Guardian, a public-private partnership involving financial institutions, law enforcement agencies, and international stakeholders. Project Guardian, launched by the Canadian Imperial Bank of Commerce (CIBC) in 2018, targets money laundering related to synthetic opioids. FINTRAC has urged virtual asset service providers (VASPs) and financial institutions to incorporate these new risk factors into their Anti-Money Laundering (AML) strategies. The agency emphasized the importance of collaboration across the crypto ecosystem, ensuring that VASPs, regulators, and financial institutions are equipped to detect and combat money laundering linked to the drug trade.

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