FINTRAC issued this Operational Alert highlighting currency exchanges in Da’esh-controlled territory, which makes them higher-risk for being abused for terrorist financing:
Identification of higher risk Iraqi financial intermediaries
The entities in Appendix A which have been flagged as higher risk foreign financial intermediaries were identified through the actions of the Government of Iraq, as part of its ongoing counter-Daesh finance activities. In December 2015, the Central Bank of Iraq took measures to reduce risks of Daesh exploiting the Iraqi financial system. These measures helped to reduce the number of revenue generating opportunities that had been available to Daesh.4 The Central Bank of Iraq did this by banning over 120 Iraqi currency exchanges (that were within or proximate to areas of Daesh territorial control) from participating in “currency auctions”5 that are managed by the bank. This ban was intended to prevent Iraqi exchange houses that operate in areas of Daesh control from gaining access to US dollars due to concerns that Daesh imposes a transaction fee on currency exchange house transactions that take place within their areas of control. In March 2016, the Central Bank of Iraq published an English version of the list of currency exchanges that had been banned from its currency auctions (the list had previously only been available in Arabic).6 This list7 is the basis for this Operational Alert and is reproduced in Appendix A.
This Operational Alert provides specific guidance to Canadian reporting entities about named foreign financial entities (noted in Appendix A) through which the Canadian financial system could be exposed to Daesh-related terrorist financing. These foreign entities should be considered high-risk by reporting entities. These businesses should file suspicious transaction reports or attempted suspicious transaction reports where entities set out in Appendix A are party to transactions that reporting entities process and where they have reasonable grounds to suspect it relates to terrorism financing.8
In addition to public advisory information from FINTRAC9 and the Office of the Superintendent of Financial Institutions10 about risks associated with financial transactions or attempted financial transactions emanating from, or destined to, the jurisdictions under Daesh control and the surrounding jurisdictions, FINTRAC has also provided information to reporting entities that they should consider when attempting to identify terrorist financing-related suspicious transactions or terrorist property.
FINTRAC is reiterating this guidance with respect to the entities noted in Appendix A for transactions that have taken place since Daesh’s territorial expansion in June 2014. Reporting entities are to undertake enhanced customer due diligence with respect to clients involved in financial transactions or attempted financial transactions involving any entity noted in Appendix A.
FINTRAC is reminding all reporting entities subject to the PCMLTFA and its associated Regulations, of their obligations11 to submit a suspicious transaction report or attempted suspicious transaction report if there are reasonable grounds to suspect that a transaction or attempted transaction is related to a terrorist activity financing (or a money laundering) offence12.
Under the Canadian Criminal Code, Daesh is a listed terrorist entity.13 In this context, FINTRAC is also reminding all reporting entities subject to the PCMLTFA and its associated Regulations, of their obligations14 to submit a terrorist property report to FINTRAC, without delay, if:
- they know of the existence of property15 in their possession or control that is owned or controlled by or on behalf of a terrorist or terrorist group; and,
- they have information about a transaction or proposed transaction in respect of property referred to above.
The Appendix lists 122 currency exchanges that FINTRAC considers higher-risk.
FINTRAC Operational Alert – HTML, PDF