Key Takeaways
- According to FINTRAC, virtual currencies have become a favoured tool for traffickers due to their use on darknet marketplaces
- FINTRAC noted that financial institutions often detect unusual activity, such as significant incoming transfers from crypto exchanges without corresponding outgoing transactions.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued an alert outlining how crypto are being used to launder proceeds from the trafficking of synthetic fentanyl and opioids. The alert aims to enhance awareness of financial risks associated with the country’s opioid crisis and provide updated indicators for identifying suspicious activity linked to this illicit trade.
According to FINTRAC, virtual currencies have become a favoured tool for traffickers due to their use on darknet marketplaces, which often only accept crypto. As per FINTRAC, these marketplaces typically provide escrow services, holding payments until a transaction is confirmed.
Once funds are released, they are deposited into the seller’s crypto wallet. Traffickers retain these funds in crypto or convert them into fiat currency through exchanges or peer-to-peer transactions.
In some cases, traffickers use additional measures to obscure the origin of funds. Methods such as crypto mixers, decentralized finance (DeFi) protocols, and peer-to-peer exchanges are commonly employed.
FINTRAC noted that financial institutions often detect unusual activity, such as significant incoming transfers from crypto exchanges without corresponding outgoing transactions. Virtual currency providers, with the capability to conduct blockchain analysis, have greater visibility into these transactions.
The alert, titled “Laundering the proceeds of illicit synthetic opioids,” builds on a similar report issued in 2018. It introduces updated risk factors based on recent analyses of financial transactions, intelligence reports, and law enforcement data.
Key indicators outlined include large-scale crypto-to-fiat conversions involving new accounts, the use of multiple virtual wallets to hide transaction origins, and deposits from accounts associated with high-risk regions or flagged for previous suspicious activities.
