2003-2004 Making a Difference

Producing and Sharing Strategic information

Building Our Strategic Analytical Capacity

FINTRAC’s rich database of financial transactions and other information is capable of yielding valuable insights into general patterns and trends related to money laundering and terrorist activity financing.

In addition to tactical analysis, which is concerned with the detection of individual cases of suspected money laundering or terrorist activity financing, we also undertake analysis of aggregated transaction reports and case disclosures to evaluate the larger picture and identify patterns and trends on the methods used by criminal and terrorist networks to acquire and launder funds. Examples of these methods are the use of false identification, uncharacteristic transactions, the use of multiple financial entities, and international money movements to and from areas identified as hot spots for criminal or terrorist activity. Combined with input and expertise from key partners, stakeholders and other external sources of information, this type of analysis is giving FINTRAC a better understanding of current and emerging money laundering and terrorist financing methods.

This year, we analyzed our holdings of tens of thousands of suspicious transaction reports (STRs) to assess the most commonly reported indicators of suspicion. We found that the majority of suspicious transaction reports (62%) were based on suspicions raised by the large amount of cash, cash in unusual denominations or involving multiple currencies, and/or money movements atypical of the expected business profile. The remaining 38% cited the use of multiple transactions, unusual account activity, concern over the source of the funds or movements to or from locations of concern as indicators of suspicion.

The Breakdown of STRs by Reported Suspicious Activity

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Reported Suspicious Activity	Percent
Percent Cash Transactions	62%
Multiple Transactions	14%
Atypical business/account activity	13%
Concerns as to the source of funds/identification	12%
Concerns about transactions involving electronic funds transfers	11%

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*Note that the percentages add to more than 100 as more than one activity may be cited in a report.

The application of data-mining methods and tools to the hundreds of case disclosures and tens of thousands of STRs provided us with initial insights into the associations between particular activities and behaviors among individuals and groups involved in money laundering and terrorist activity financing. This analysis allowed the Centre to begin assessing and comparing typologies evident in money laundering with those evident in terrorist activity financing, and to begin examining whether associations can be drawn between certain types of typologies and specific criminal or terrorist groups. It also helped us to identify which organizations and groups are active in Canada so that we might build on this knowledge, both from internal and external sources of information. This type of analysis is essential to our ongoing analytical effectiveness as it supports our systems development for automated detection.

Additional analysis of our case disclosures indicates that all report types are used in disclosures and that international wire transfers figured more prominently in our case disclosures than was originally anticipated. In the last year, electronic funds transfers figured prominently in the Centre’s money laundering and terrorist activity financing case disclosures. As well, 69% of our case disclosures involved more than one reporting entity, which speaks to the importance of having a central collection and analytical capability.

FINTRAC’s growing body of strategic intelligence also enriched discussions with our partners on policy, legislative and intelligence priorities. In the past year, the Centre conducted a series of executive briefings for the departments and agencies involved in both the Public Security and Anti-Terrorism Initiative and the National Initiative to Combat Money Laundering. These briefings provided our partners with a greater understanding of the unique intelligence perspective that FINTRAC can provide.

The Centre also intensified its contribution of strategic information about patterns, trends and typologies to a number of domestic and international fora, including the National Coordinating Committee on Organized Crime, the Financial Action Task Force and the Egmont Group.

A key outcome of our strategic analytical work was a deeper awareness about the type and nature of information that must be captured and tracked to better understand money laundering and terrorist activity financing typologies. Developing both this awareness and the automated systems required to capture and track the necessary information will be a priority in the new fiscal year.

Our Organization

Sustaining Organizational Effectiveness

Key to our early success in getting up and running was our emphasis on striving for organizational excellence and being an exemplary employer. These factors are still fundamental.

FINTRAC’s employees are its most important and valued resource. Drawn from both public and private sectors, they come from a wide range of backgrounds, including forensic accounting, law, intelligence analysis, national security, law enforcement and banking and securities. To foster an environment that attracts and keeps its employees, the Centre continued to encourage a healthy work/personal life balance and to provide opportunities for professional and personal growth and learning.

In 2003 - 04, with these commitments in mind, many remaining elements of the management framework were put in place or strengthened in accordance with the Government of Canada’s emphasis on modern management and accountability.

Values and ethics are cornerstones of a productive and accountable organization. FINTRAC took pains to advance these principles by developing a code of conduct and ethics that engaged employees in discussions about workplace expectations. The Centre provided, as well, training initiatives directed to the promotion of integrity, professionalism, security awareness and procedures for handling privacy issues. Policies and procedures defining responsibilities and accountabilities, including strong stewardship, have been formalized and communicated to staff.

The Centre made progress in the establishment of a performance management framework. Once implemented, the framework will ensure that critical performance information is identified, collected and used to support decision-making and to demonstrate results.

Protecting Sensitive Information at FINTRAC A layered approach to security has been adopted for FINTRAC’s premises and systems. It incorporates access control, security monitoring and a response capacity. This coverage is also extended to regional offices. Access to personal information within the Centre is limited to those employees whose designated function makes access essential. All access to personal information uses strong authentication and biometric software to ensure that the person working with the information is authorized to do so. FINTRAC’s computer security prevention measures include state-of-the-art firewalls to prevent computer hackers from gaining access and active intrusion detection monitoring. Once personal information has arrived through FINTRAC’S external communications lines, it is processed and stored on computer systems which are not connected to, or accessible from, the Internet. Case disclosures can take place only after FINTRAC’s analysis sector is of the view that the thresholds for money laundering or terrorist activity financing have been met, and senior management has reviewed and agreed with the findings. Access to FINTRAC’s facilities and to personal information in the Centre’s databases is recorded and monitored. All staff are made aware of their responsibilities to protect information and severe penalties exist in the PCMLTFA, which can be applied if an employee or contractor were to disclose personal information improperly.

Protecting Personal Information

A robust, well-understood and strongly enforced security policy is an integral part of FINTRAC’s operations. In 2003-04, the Centre met its commitments to protect the personal information entrusted to it, the processes used in handling such information, the results of its analyses, and its people and premises.

The protection of personal financial information received from reporting entities is one of the pillars of the PCMLTFA. These sections of the Act provide assurance for reporting entities - and the Canadian public - that information about the financial transactions of law-abiding citizens will be protected from unauthorized use and disclosure.

The protection of privacy at FINTRAC is the responsibility of privacy and security personnel working in tandem with all employees. In 2003-04, their combined efforts introduced a number of specific security and privacy initiatives that support existing measures. The Centre implemented enhanced security measures and employees participated in security awareness sessions. New employees and contractors are briefed on security procedures at the time of their arrival. The physical and electronic security systems continue to be upgraded.

FINTRAC has developed a comprehensive privacy policy and a privacy impact assessment that has been shared with the Office of the Privacy Commissioner. An outline of the obligations involved in the processing of Access to Information and Privacy requests has also been distributed to all staff.

One important aspect of FINTRAC’s security is ensuring that business can continue despite a disrupting event. It is reassuring to note that the Centre was able to maintain critical operations during a prolonged period of instability in the region’s power grid in August 2003. At present, an interim plan is in place for continuing business during a disruption and the development of a more permanent plan, which includes business resumption, is underway.

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