Following the money, sanctions evasion, property reporting and the fight against illegal fentanyl: Takeaways from FINTRAC’s recent webinar
The Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) recently hosted a webinar titled Following the Money: Sanctions Evasion, Property Reporting and the Fight Against Illegal Fentanyl (the “Webinar”). The Webinar provided updated information in connection with compliance obligations and reporting requirements related to sanctions evasion, sanctioned property and FINTRAC’s new reporting tool, the Listed Persons and Entities Property Report (“LPEPR”).
We previously discussed the implementation of the foregoing sanctions related requirements in our article titled, FINTRAC Updates Guidance on Reporting Terrorist and Sanctioned Property. The Webinar serves as an opportunity to revisit our earlier article and expand on key points in light of recent developments. Specifically, this article discusses how FINTRAC expects compliance programs to be updated in light of the LPEPR and related developments, as well as re-vamped reporting obligations.
Compliance programs updates: Action items
As the regulatory environment evolves, reporting entities (“REs”) must take a holistic approach to compliance by aligning their anti-money laundering (“AML”) programs with sanctions-related obligations. The Webinar provided guidance on several key areas where REs are expected to amend their AML compliance programs, including:
Compliance officers
Compliance officers are expected to understand sanctions evasions risks, trends, and typologies. Compliance officers are also responsible for ensuring that compliance programs are updated to reflect the new LPEPR requirements, as well as the updated suspicious transaction report (“STR”) obligations.
Policies and procedures
REs must incorporate sanctions-related reporting obligations into their internal policies. These procedures should clearly outline how sanctions risks will be identified and escalated.
Screening and monitoring tools
Screening and monitoring tools must be adapted to ensure they capture all applicable sanctions lists. These include the Canadian Autonomous Sanctions List, which encompasses individuals and entities designated under the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), as well as the UN Security Council Consolidated List, which identifies entities subject to UN Security Council measures.
Training programs
Training programs must educate staff on how to identify the characteristics of a sanctions evasion offence and to understand how their business may be exposed to such risks. Additional training should be provided to front-line staff and investigators overseeing suspicious transaction reviews. All training should be tailored to the size, complexity, and risk exposure of the RE.
Risk assessment
Risk assessments must integrate sanctions-related risks into ongoing review processes. REs should be vigilant for red flags that may indicate sanctions evasion. These red flags include the use of intermediary jurisdictions, attempts to evade import or export controls, the presence of complex corporate structures, engagement in non-resident banking, reliance on proxies or enablers, and the use of virtual currencies or other non-traditional financial channels.
Reporting to FINTRAC
The Webinar also discussed FINTRAC’s expectations with regard to reporting sanctions evasion related offences. All information that supports the identification of a financial transaction as potentially involving a sanction evasion offence should be included in a single report to FINTRAC. These reports should include relevant information about the products and services tied to suspicious transactions and accounts.
FINTRAC now includes sanctions evasion-related values within the STR form. These values cover a range of primary suspicion types, including money laundering, terrorist financing, money laundering and terrorist financing, sanctions evasion, money laundering and sanctions evasion, terrorist financing and sanctions evasion, or money laundering, terrorist financing and sanctions evasion.
Final thoughts
Canada’s evolving sanctions landscape introduces new compliance obligations that reflect the growing complexity of global financial crime. As FINTRAC’s role expands, REs must stay agile, informed, and ready to adapt.
By integrating sanctions compliance into AML programs and remaining vigilant about updates from FINTRAC and Global Affairs Canada, REs can help protect Canada’s financial system from abuse and ensure they remain in step with their regulatory obligations. If you feel your business may be impacted, please contact a member of our Financial Services or Compliance teams for assistance.
