Since Hamas’ attacks on Israel on October 7th, 2023, several Canadians have been reported dead. Several more are being held hostage.
Closer to home, on October 12th, a day on which Hamas’ leaders were calling for a “global day of Jihad,” three young men, two of whom were minors, entered a Jewish school in Toronto, ON, destroyed property and uttered threats of death and violence. Ultimately, they left the school and were arrested without any violent fallout. They are now free on bail, while students of the school grapple with mounting terror and trauma.
While we have, as Canadians, enjoyed a long period of relative peace and prosperity, we cannot rest in any certainty that global conflicts will not land on our home shores. In all likelihood, they already have.
As practitioners in the anti-money laundering (AML) and counter-terrorism financing (CTF) spaces, we must look to gain deeper understandings of the funding mechanisms that fuel such incidents in the hope that such intelligence can be used to prevent, detect, disrupt and deter such activities. While it is not yet clear whether last week’s school incident was financially motivated, it is noteworthy that there are well-known paths for terrorism funding paths related to attacks against Jews in Israel:
- Funds originating in Iran, but often flowing through sympathetic third countries flow to terrorist conspirators and their families;
- Payments are made in specific amounts for the completion of specific tasks: e.g.
- USD 10,000 for each death of a targeted person, or person from a targeted group; and
- Additional bonuses paid to the family of the threat actor where they lost their own life, such as in a suicide bombing.
While it does not appear that such brazen attacks are yet being carried out against Jews on Canadian soil, it is nonetheless important to be vigilant. On October 20th, the U.S. AML authority, the Financial Crime Enforcement Network (FinCEN) related updated guidance specific to Hamas and related activity. While the Canadian authority, the Financial Transactions and Analysis Centre of Canada (FINTRAC) has not yet released specific guidance, its guidance on terrorism financing, including guidance on ideologically motivated domestic extremism is instructive. The bulletin notes that when reporting to FINTRAC, #IMVE can be used to denote “ideologically motivated violent extremism” in the freeform field.
From the FinCEN bulletin, we know that:
- Operatives are being harboured in, and funds are flowing through third countries including:
- Sudan
- Türkiye
- Algeria
- Qatar
From a Canadian perspective, it’s important to note that the sanctions regime related to Iran is not the same as in the US, and it is possible to see transactions originating directly from Iran as well.
Red flags include
- Transactions with a nexus to sanctioned entities, persons or virtual currency addresses
- Information in a transaction (such as the message to the recipient) that appears to support Hamas or related terrorist activities
- Unusual MSB transactions (e.g. a customer that does not usually deal with MSBs) involving MSBs that deal in high risk jurisdictions, including the third countries noted above, or Iran[1]
- Transactions that involve vaguely named or described “trading companies” that have a nexus in high risk jurisdictions, including the third countries noted above, or Iran
- Charities or not for profit organizations that collect donations and do not appear to do charitable works, or appear to support Hamas or other terrorist groups, or activities.
Canadian reporting entities can submit suspicious transaction reports to FINTRAC, and should indicate in the opening sentence that the activity being reported may be related to terrorism and threats to Canada’s national security. For non-reporting entities, a voluntary report can also be submitted online. In both cases, the person and/or entity submitting the report is protected so long as the report is made in good faith.
Reports related to matters of national security can also be made directly to the Royal Canadian Mounted Police (RCMP) RCMP National Security Information Network by phone at 1‐800‐420‐5805 or by email at RCMP.NSIN-RISN.GRC@rcmp-grc.gc.ca. Reports can also be made to the Canadian Security Intelligence Service (CSIS) online.
As an AML geek, and as an ally, I urge all readers to be vigilant in your personal and professional lives. Hate cannot be allowed to spread unchecked. Terror must not be permitted to reach into our schools. We must stand against it.
[1] In Canada, transactions with a nexus to Iran are permitted for some purposes, however, all transactions with a known nexus to Iran are reported to FINTRAC under the Canadian Ministerial Directive on Iran – https://fintrac-canafe.canada.ca/obligations/dir-iri-eng