The Financial Transactions and Reports Analysis Centre (FINTRAC) of Canada has published its guidelines on virtual currency transactions. The guidelines identify several virtual currency ML/TF indicators or red flags that could indicate that something about a transaction may be unusual or irregular.
FINTRAC used prior ML/TF cases and high-quality STRs along with research by organizations like FATF to identify these ML/TF indicators. Some of these indicators include activities like a client exchanging large volumes of Bitcoin for privacy coins, a client not willing or able to share the source of their privacy coins, a client’s virtual currency address being linked to fraudulent activity, a client concealing the source of virtual currency related funds, occurrence of high volume of transfers between different types of virtual currencies at high frequencies, a client providing an anonymous email address obtained through an encrypted email service, etc.
Even though a single ML/TF indicator may not individually seem suspicious, it could help better assess transaction(s) to determine maleficence. These ML/TF indicators may also be used as financial intelligence to provide reasonable grounds for prosecution of an offender. Nevertheless, FINTRAC specifies that these ML/TF indicators should only be treated as one part of a larger puzzle. This means that these indicators do not replace organization-specific STR programs, they only complement them.
Source: FINTRAC, Canada