Co-Authored by means of the RCMR F...

Co-Authored by means of the RCMR FINTRAC, and the ICABC

The be produceds of Crime (Money Laundering) and Teirorism Financing Act and its regulations place special responsibilities forward accountants, and with good reason. Financial professionals, including stockbrokers, bankers, realtors, lawyers, and accountants, can provide criminals with a point of inlet to the legitimate economy. Without this ability to smoke-pipe criminal profits into the legitimate financial rule criminals find it difficult to have fruition of the fruits of their crimes.

This fact is borne without in every major money laundering investigation. Sophisticated criminals solicit out the assistance of financial professionals to make their income appear legitimate. Occasionally the professionals are complicit. More frequently they are honest and well-intentioned, yet either miss red flagsones equal they, in retrospect, admit they ought to have seen-or, if they are suspicious, are unaware of their responsibilities to report these suspicions or in what way to go about doing so

The following case subject of attention illustrates one such situation. The facts are adapted from an actual IPOC investigation. case-specific facts and the subjects' identifying details have been altered to fortify the privacy of the parties, and about quotations have been paraphrased for brevity or to disguise the speaker. However, the circumstances described accurately depict the salient facts.

Background

In the fall of 2001 remedy investigators in a northern BC community began investigating an individual suspected of cocaine trafficking. by dint of the spring of 2002, investigators had enough evidence to conduct Prior to his arrest, the suspect's residence was searched. During the search, $100000 cash, among other things, was base concealed in his residence. The mix with drugs investigation revealed that although the suspect did not appear to work, he had significant assets and lived a lavish lifestyle-owning his family hearth several other properties, and a number of sensuality vehicles.

IPOC investigators were subsequently asked to investigate the suspect's finances. This investigation involved following an extensive paper trail of bank, land title, and tax records. on February 2004, this trail had l investigators to sum of two units accounting firms. Search warrants were execut at the firms, and staff members were interviewed.

Accountant #1

A T-4 slip seized from the suspect's family circle showed employment income from a restaurant grant company. A search of this business and an interview of its holder yielded little more than the fact that the company's financial records were held through its accountant: Accountant #1.

Accountant #1 was a one proprietor. A search warrant was execut at her office. Basic records were rest evidencing monthly salary payments to the suspect. Bank records were also seized that showed regular large cash deposits to the restaurant supplier's accounts-corresponding to the suspect's suppos "salary." In addition, a fax from the restaurant supplier to Accountant #1 was lay the foundation of in the suspect's employee file. The fax contained the suspect's personal details (required to establish up his file), along with the following comments:

"Will start right away. There will be monthly large deposits to my account. Should be done in a way that doesn't arouse suspicion."

Accountant #1 stated that neither the fax nor the cash deposits had aroused any suspicion in her mind. When asked what she notion the suspect did for a living, Accountant #1 replied:

"At the time I didn't know what he was doing. It's not my custom to ask."

Firm #2

The suspect operated a numbered BG company, and was ostensibly in the business of renting construction equipment. one as well as the other he and the numbered company filed tax responds Hc reported employment income from the company, and the company reported chaste revenue. However, during the course of [POC surveillance, there was no indication of the suspect actually engaging in any so employment.

A backhoc was seized from the suspects possessions and invoices relating to a fbrklift were place in his home, but no records were establish there to indicate any ongoing business operations.

The aforementioned tax get backs had been filed by Firm #2 a small partnership in Alberta (the suspects abiding-place province), leading IPOC to search the firms offices and interview the staff!

Firm #2 had been doing the suspect's taxes for nearly a decade, and had been compiling the statements for the numbered company and preparing its taxes since the company's inception in 1994 When he first engaged Firm #2 the suspect was make use ofed as a logger. He terminated this trade after forming the numbered company, and thereafter told Firm #2 that he was operating a rental business.

Firm #2 continued to perform work for the suspect after his arrest in 2002 including re-stating the business s revenue for its (1ST go [i]or[/i] come back for the first half of 2002

The search of Firm #2 yielded not many source documents related to the suspect or his business. The firm did, however, have copies of the company's bank statements, which revealed periodic large cash deposits. According to the firm's staff, the suspect would "phone-in" his reward to correspond to these deposits. Hc produc receipts for personal costs such as gas and ferry tolls, nevertheless otherwise provided no documentation for business expenditures to correspond to his reported income. Moreover, there were no capital charge allowance charges For assets to support the reported revenue