Organized crime has “consciously and actively” exploited federal pandemic benefits: intelligence reports

The federal government has spent billions of dollars on income support to help Canadians withstand the pandemic – but it seems that these emergency benefits have inadvertently gone to criminals as well.

According to a recently obtained financial intelligence report, criminals and organized crime appeared to be “knowingly and actively” defrauding the Canadian Emergency Response Benefit (CERB) and Canadian Emergency Trading Account (CEBA) programs.

The Financial Transactions and Reports Analysis Center of Canada (FINTRAC), the country’s financial intelligence department, observed that during the first few months of the CERB program, criminal organizations filed multiple applications using stolen identities.

“They tend to hire groups of individuals to collect the profit checks in various locations around the city,” said the 2020 FINTRAC report, published in a request for access to information submitted by Ottawa researcher Ken Rubin.

“On one occasion, the reporting entity indicated that social media was being used as the means of recruiting these people.”

Launched in March, the CERB originally paid $ 2,000 a month to Canadians whose income was hit by the pandemic. The program paid more than $ 74 billion before the government switched to paying Canadians with employment insurance.

A similar scheme was used by criminal organizations exploiting the Canadian Crisis Business Account: candidates transferred the $ 40,000 grant from their business accounts to personal accounts and withdrew the money in cash.

“Why wouldn’t you take that? I mean, it’s free money by the way,” said Sanaa Ahmed, a law assistant at the University of Calgary.

“I think this is one of those crimes of chance. Even at the time the government announced these relief measures, we knew some of that was bound to happen, because Ottawa said quite explicitly that, you know, they’re not. they really cared about questioning whoever was running, so it was only prudent that some of the candidates would be fraudulent. “

CERB mixed in with laundered funds

Sometimes the profit money seemed to be mixed with laundered funds.

“Reporting entities have indicated that criminal organizations, using stolen IDs and individuals recruited through social media, are operating ‘CERB frauds’ in certain cities; prepaid cards are loaded with CERB benefits and other laundered funds,” the intelligence report said.

The phrase “reporting entities” refers to casinos, auditors, crown agents, Canadian banks and foreign banks in Canada, insurance and real estate brokers, sellers of precious stones and metals and others – all of whom must report suspicious transactions to FINTRAC if there are reasonable reasons to believe that they may be linked to money laundering or terrorist financing.

Jessica Davis, a former senior intelligence analyst with CSIS who now heads the consulting firm Insight Threat Intelligence, said using prepaid cards is a well-known money laundering tactic to prevent paperwork.

“Criminal beings combine the money obtained through CERB fraud and identity theft with criminal income, possibly from various different schemes, possibly other frauds, possibly other criminal activity. So everything is just drawn into one pot, handed over to prepaid cards as a way to cut the money. , “she said.

“There was a huge impetus to quickly get the money out, which I think for many Canadians will be a lifesaver … whether or not there were proper safeguards, well, I think criminals will often find solutions for many of those anyway,” she said.

The Government of Canada’s employment insurance website. (CANADA PRESS)

The report also said payments were sent to people who appear to be engaged in illegal or suspicious financial activity. FINTRAC said a number of clients received checks despite not living in Canada and while appearing to live in “jurisdictional care.” These are countries and areas that FINTRAC views as a higher risk of money laundering or terrorist financing.

FINTRAC said that since the beginning of 2020, as of October 31 of this year, it had received 30,095 suspicious transaction reports where COVID-related benefits were referrals, a small percentage of the total reports. The majority of those 30,000 also dealt with human trafficking and drug restrictions.

About 1,500 of these dealt with CERB and / or CEBA-related fraud.

“Given that there is no monetary threshold associated with the reporting of a suspicious transaction, it is not possible to provide an exact number in relation to the total amount of CERB / ​​CEBA funds that may have gone to organized crime,” said spokeswoman Mélanie Goulette. Nadon.

Prosecutions unlikely

While the FINTRAC document details how organized crime used the programs, it is far from the first warning. In July 2020, the Canadian Revenue Agency advised the finance committee of the House of Commons that the program was targeted by organized crime.

A spokesman for the Canadian Revenue Agency stressed that the government has been quick to ensure that Canadians can stay afloat at the start of the pandemic.

“Throughout the life of the CERB program, we have made adjustments to introduce new measures and controls to address suspicious performance,” said Etienne Biram.

“The CRA has zero tolerance for fraud. The vast majority of Canadians are honest, and the CRA has effective systems in place to manage the small percentage of people who file fraud claims.”

FINTRAC, which helps police detect money laundering and the financing of terrorist activities, calls money laundering a “multi-billion dollar problem” in Canada. Investigating this problem, however, was not necessarily a priority.

“Canada does not prioritize the investigation and prosecution of financial crime,” Davis said.

“Canada is a fairly important economy, there is serious criminal activity and there is significant financial criminal activity taking place in this country and I would say that broadly speaking, the police are not able to detect and interrupt that activity.”

Ahmed agreed, noting in the past decade Canada has secured less than 50 wash trials, calling prosecutions in these cases “unlikely, highly unlikely.”

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