The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) issued an alert highlighting the role of cryptocurrencies in laundering proceeds from synthetic fentanyl and opioid trafficking.
On Jan. 23, FINTRAC, the national financial intelligence agency of Canada, published new client risk factors and indicators of synthetic opioid trafficking and production to combat money laundering of illicit funds linked to the nation’s drug problem.
Curbing crypto use in the opioid trade
FINTRAC’s alert, titled “Laundering the proceeds of illicit synthetic opioids,” is an update to a 2018 version that includes new risk factors derived from analyses of financial intelligence, transactions, publications and law enforcement reports.
While highlighting cryptocurrency’s increasing role in laundering illicit gains from synthetic opioid sales, FINTRAC noted several red flags to help law enforcement agencies improve vigilance within the crypto sector.
These included large crypto-to-fiat conversions involving newly created accounts using multiple virtual wallets to obscure transaction origins before funds are cashed out or transferred internationally.
The agencies were also asked to be on the lookout for deposits into cryptocurrency exchanges from accounts linked to high-risk regions or previously flagged for suspicious activity.
A collaborative fight against crypto crime
This alert aligns with Canada’s participation in the North American Drug Dialogue and is an output of Project Guardian, a public-private partnership that includes financial institutions, law enforcement agencies and international stakeholders.
Project Guardian (unrelated to the Project Guardian initiative of the Monetary Authority of Singapore) was launched by the Canadian Imperial Bank of Commerce (CIBC) in 2018 to target synthetic opioid-related money laundering.
FINTRAC also urged virtual asset service providers (VASPs) and financial institutions to integrate these new risk factors into their Anti-Money Laundering (AML) strategies.
The agency reinforced the need for collaboration across the crypto ecosystem, ensuring VASPs, regulators and financial institutions are equipped to detect and combat money laundering tied to the drug trade.
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