Presentations to Reporting Entities

Presentation for dealers in precious metals and stones

2008

Table of Contents

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Slide 1: Requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act


Dealers in Precious Metals and Stones

October 2008


Slide 2: Presentation Overview


  • Introduction
  • About the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
  • Overview of money laundering and terrorist financing
  • Dealers in precious metals and stones and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
  • FINTRAC's compliance approach
  • Timeline

Slide 3: Introduction


  • New requirements under the PCMLTFA for dealers in precious metals and stones are effective on December 30, 2008.
  • FINTRAC will be responsible for ensuring compliance with these legislative and regulatory obligations.

Slide 4: FINTRAC


  • FINTRAC is Canada's financial intelligence unit. The Centre produces financial intelligence for law enforcement and national security agencies. FINTRAC is uniquely positioned to analyze millions of financial reports to produce this intelligence.
  • Created in 2000 under the PCMLTFA.
  • Plays an integral role in Canada's effort to combat organized crime and terrorism.
  • Independent agency reporting to the Minister of Finance and Parliament.
  • Operates at arm's length from law enforcement and other bodies.
  • Works in partnership with individuals and entities subject to the PCMLTFA.

Slide 5: FINTRAC's Role


  • Collect, analyze, assess and disclose information related to money laundering, terrorist activity financing and threats to the security of Canada.
  • Ensure compliance with obligations under Part 1 of the PCMLTFA and related regulations.
  • Ensure protection of personal information under its control.
  • Enhance public awareness of money laundering and terrorist financing.

Slide 6: What Is Money Laundering?


  • The United Nations defines money laundering as “any act or attempted act to disguise the source of money or assets derived from criminal activity”.
  • Essentially it is the process where “dirty money” is transformed into “clean money”.
  • More than just cash, it also includes valuable items (for example real estate, diamonds) and other kinds of funds (for example electronic funds).

Slide 7: Stages of Money Laundering


  • Placement – initial stage of putting the cash into the financial system
  • Layering – creating layers of financial transactions to disguise the audit trail and sources of funds
  • Integration – returning the laundered funds back into the economy to create a perception of legitimacy

For more information, please consult Guideline 1: Backgrounder.


Slide 8: What Is Terrorist Financing?


  • Terrorist financing is the process by which money is provided to an individual or group to fund terrorist activities
  • Different from money laundering—funds may be either from legitimate or illegitimate sources, but used to help facilitate a terrorist act
  • Often deal in smaller amounts than money laundering

For more information, please consult Guideline 1: Backgrounder.


Slide 9: Reasons for Including Dealers


  • Closing the gap in the current regime
  • Cases of money laundering and terrorist financing involving precious metals and stones in Canada and abroad
  • Meeting international standards:
    • Financial Action Task Force (FATF) recommendations
    • Other countries already have similar legislation (i.e. United States, Belgium, Australia)

Slide 10: Examples of Money Laundering for Dealers


  • Retail gold purchases: a money launderer or someone acting on their behalf purchases gold from a retail merchant with funds that were generated directly by an illegal activity.
  • Laundering proceeds through diamond market: a criminal who had benefited from a fraud attempts to wire money to jeweller with a view to purchase diamonds.
  • Sale of gold to jeweller: a money launderer sells gold (that may have been stolen or smuggled) to a jeweller. The gold itself may be the “proceeds” of crime that need to be laundered.

Source: FATF Typologies