The SIC, Lebanon's Financial Intelligence Unit (FIU), receives, analyzes, investigates suspicious transaction reports (STRs) and ensures compliance of banks, financial institutions and other reporting entities with the AML/CFT regulations.
TORONTO - Canada's money-laundering
watchdog is studying the use of crowdfunding platforms by suspected
terrorists and says in an internal study that the reporting protocol
poses a "significant challenge" in trying to identify such
The Fintrac report, obtained by The Canadian
Press through an Access to Information request, says there is a lack of
information available in electronic fund transfer reports on contributors to
Financial companies, money services businesses
and casinos are legally required to submit the reports to Fintrac for
cross-border, electronic transactions above $10,000.
That lack of information poses a problem for
financial intelligence, "especially when trying to flag individuals
supporting a crowdfunding campaign that may be suspected of being (terrorist
financing)-related by an investigative authority," Fintrac says in the
November 2015 report.
The federal agency said the reports
typically don't include information on contributors to crowdfunding campaigns
because the amounts transferred tend to fall below the reporting threshold of
"Terrorism financing and high-risk traveller
cases, in particular, most often entail relatively small amounts of
money," spokeswoman Renee Bercier said in an email.
Daryl Hatton, founder of ConnectionPoint.com, a
company that runs three crowdfunding websites, said they don't have to submit
funds transfer reports because that is the duty of the payment processors.
"The short answer is that crowdfunding
platforms leverage the anti-money laundering systems of our payment
processors," Hatton said in an email.
"We add our own checks on the identities of
the people running the fundraising campaigns but trust the much more
sophisticated work our partners are doing in this area."
Hatton said he has removed a "very
small number" of campaigns over terrorism financing concerns. The decision
to remove the campaigns was made in collaboration with payment processors and
was done more as a precaution, he said.
Craig Asano, the executive director of the
National Crowdfunding Association of Canada, said it's important that there are
mechanisms in place to detect such transactions.
The Financial Action Task Force, an international
organization that aims to combat money laundering and terrorist financing,
flagged crowdfunding as an emerging terrorism-finance risk in a 2015 report.
The task force report said crowdfunding platforms
are vulnerable to being exploited for illegal purposes because people can mask
the true reason for their fundraising efforts.
It also said there have been instances in Canada
where people under investigation for terrorism-related offences have used
crowdfunding sites before leaving the country or attempting to leave the
country, suggesting that they could be using that money to fight overseas. But
details of those cases were not provided.
In addition to filing reports for large
electronic funds transfers, banks and payment processors also have an
obligation to report suspicious transactions to Fintrac, even ones that fall
But in the case of crowdfunding
campaigns, banks are only facilitators of the transactions and typically
don't have all of the information about the fundraising effort, said
Moh Datoo, a senior adviser in the financial crime risk management practice at
Securefact Transaction Services.
"The actual information on who the investors
are, the identities of the companies and the individuals — all that information
is maintained by the crowdfunding platform," said Datoo. "So it
becomes inherently very difficult for banks to be able to spot illicit activity
within those transactions."
Datoo suggested that regulators undertake a
"countrywide" review of existing laws in light of technological
advancements that have transformed the financial services industry.
"A lot of the (current) regulations do
not consider the fast-changing pace of technology and how it's affecting the
way businesses are being run today," he said.