Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) issued an urgent warning on January 23, urging businesses in the cryptocurrency sector to be more vigilant in detecting transactions linked to opioid-related money laundering.
Notably, the advisory comes amid growing concerns over the increasing use of digital currencies, such as bitcoin and ether, by criminal organizations.
Canada’s FINTRAC: Increased Risk of Illicit Activity
FINTRAC’s advisory highlights that cryptocurrency’s semi-anonymous nature makes it an appealing tool for illicit actors involved in the opioid trade. With the rise of decentralized finance (DeFi) platforms, the agency noted that money laundering activities are becoming harder to trace.
According to FINTRAC, while cryptocurrency transactions offer the benefit of transparency, the difficulty in tracing illicit activities on some platforms contributes to the increase in money laundering risks. The agency called for enhanced compliance measures by cryptocurrency exchanges and financial institutions to combat the growing threat.
For this case in particular, virtual currencies and darknet marketplaces have facilitated the procurement and distribution of illicit synthetic opioids. According to the analysis by FINTRAC, traffickers often use virtual currencies such as bitcoin, ethereum, USDT, and others to pay for precursor chemicals and finished opioid products.
This allows them to transfer value across borders while avoiding the oversight of the traditional financial system.
The text also notes that lower-level or “micro-traffickers” have been able to leverage the darknet to sell finished opioid products internationally to a wider and more geographically dispersed consumer base, using virtual currencies as payment and postal/courier services for delivery.
FINTRAC observed that traffickers would often deposit and withdraw funds at online gambling platforms, using these platforms to disguise proceeds from fentanyl and opioid trafficking as wagers and winnings from online gambling.
Government Action on Money Laundering
The Canadian government has made efforts to curb money laundering tied to the opioid crisis, with FINTRAC being an essential part of these measures. The agency’s advisory urges crypto businesses to monitor transactions closely for suspicious activity, particularly those that involve large transfers or wallets with no clear origin.
“Businesses must ensure they are equipped to detect and report suspicious transactions, especially those related to the illicit drug trade,” said the alert.
Collaboration remains a cornerstone of the Canadian regulator’s initiative. FINTRAC emphasized the importance of cooperation among VASPs, regulators, and financial institutions to combat this vice effectively.
