Operational alert: Laundering of the proceeds of romance fraud

Issued in partnership with the Canadian Anti-Fraud Centre

Operational alert: Laundering of the proceeds of romance fraud (PDF version, 190 KB)

Reference number: FINTRAC-2019-OA001
April 2019

Romance fraud involves perpetrators expressing false romantic intentions toward victims to gain and then take advantage of their trust and affection in order to access their cash, bank accounts and credit cards. The Canadian Anti-Fraud Centre has found that romance fraud victims account for some of the highest dollar losses per year from mass marketing frauds in Canada. However, romance fraud is one of the lowest reported types of mass marketing fraud, because victims can be ashamed to come forward, or may be unaware or unwilling to accept that they are a victim.

The laundering of the proceeds of romance fraud largely resembles that of other types of mass marketing fraud. However, reporting entities—front-line employees, in particular—must be aware of contextual factors that both suggest clients are victims of romance fraud and might not be apparent from reviewing transactions alone. To that end, reporting entities, particularly financial entities and money services businesses, should consider the indicators set out below that relate to both victims and the transactions perpetrators of romance fraud carry out in combination with the indicators of mass marketing fraud listed at the end of this document. FINTRAC uses these indicators, along with other context and facts, to assess reporting entities' compliance with their suspicious transaction reporting obligations.

Victims

Generally, perpetrators use fake profiles on social media or online dating sites—set up with stolen photos, and fictitious names and occupations—to contact possible victims. Once trust is established, perpetrators request financial assistance. Although the specific reasons perpetrators give for needing funds vary, they tend to focus on life-or-death medical emergencies, being unable to access their own money in a foreign jurisdiction (e.g., their bank account is frozen or their wallet lost or stolen), fees imposed by an international authority (e.g., taxes, customs or legal fees) and/or money needed to obtain more money (e.g., investments, inheritance fees, work equipment, wages). Reporting entities should be particularly attuned to clients telling hard-to-believe stories about why they are conducting certain transactions.

Indicators relating to romance fraud victims

Transactions

Romance fraud generally involves victims carrying out transactions that do not fit their profile, including sending funds directly to individuals to whom they have no apparent connection. This type of fraud may also feature sudden increases in wires/email money transfers (EMTs). In some instances, victims sell or pool assets to fund transfers to perpetrators and/or third parties, sending increasing amounts over time as perpetrators gain their trust. These funds are generally sent domestically through wires/EMTs, and internationally by wire transfer through banks and money services businesses. Common international destinations for these transfers are the United States, Ivory Coast, Nigeria, Ghana, Burkina Faso, South Africa, Mali, the United Kingdom, Malaysia, Turkey, Philippines and Benin. Returned or cancelled transfers may indicate either that perpetrators have been caught or victims have realized they are being defrauded.

A money mule is an individual who, wittingly or unwittingly, transfers or transports funds on behalf of the perpetrator of a crime, or a money launderer.

In many cases, perpetrators attempt to have victims act, unknowingly, as money mules to move proceeds of crime to other victims, perpetrators and/or third parties. As a money mule, victims serve as intermediaries to distance the funds from the perpetrators and make transactions more difficult to track. The transactions conducted by money mules may resemble in-and-out activity, which could, for example, include multiple third-party transfers into the victim's account followed by cash withdrawals. These transactions could also take the form of outgoing wires/EMTs or purchases of money orders/bank drafts. Reporting entities should be mindful of individuals conducting transactions at the direction of others (who may or may not be present at the time) or who do not have the expected information related to the transactions. In addition, victims may give perpetrators direct access to their bank accounts by disclosing online login information or sharing bank cards.

Indicators associated with transactions related to romance fraud

Indicators of mass marketing fraud

Reporting entities may wish to advise victims of romance fraud to contact the Canadian Anti-Fraud Centre at 1-888-495-8501 and their local police.

Reporting to FINTRAC

To facilitate FINTRAC's disclosure process, please include the term Project CHAMELEON or #CHAMELEON in Part G—Description of suspicious activity on the Suspicious Transaction Report.

(See also, Reporting suspicious transactions to FINTRAC.)

Contact FINTRAC

© Her Majesty the Queen in Right of Canada, 2019.
Cat. No. FD4-19/2019E-PDF
ISBN 978-0-660-30150-1

FINTRAC Operational Alerts provide up-to-date indicators of suspicious financial transactions and high-risk factors related to new, re-emerging or particularly topical methods of money laundering and terrorist activity financing.

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