Fentanyl cash laundering linked to online betting sites

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Canada’s financial intelligence agency suspects online gambling platforms are being used to launder proceeds from fentanyl dealing and production.

In an operational alert, the Financial Transactions and Reports Analysis Centre of Canada says there is reason to believe people are depositing and withdrawing funds at online casinos to disguise proceeds from the traffic in deadly fentanyl and other opioids as wagers and winnings.

The newly published alert says known fentanyl traffickers have frequently sent money to digital gambling sites and received funds in return from associated payment processors in Canada, Malta and the United Kingdom.

The federal centre, known as Fintrac, identifies cash linked to money laundering and terrorism by sifting through millions of pieces of data annually from banks, insurance companies, securities dealers, money service businesses, real estate brokers, casinos and others.

The agency then discloses the resulting intelligence to its partners, including Canada’s spy agency, the RCMP and other police services.

The operational alert flags numerous telltale signs to help businesses detect and report suspicious dealings that may be linked to highly addictive fentanyl, which has driven an alarming overdose crisis in Canada.

In preparing the alert, Fintrac analyzed a sample of about 5,000 suspicious transaction reports related to fentanyl and synthetic opioids filed between 2020 and 2023.

Most of the reports involved the suspected distribution of synthetic opioids within Canada.

The transaction reports also revealed suspected imports of precursor chemicals, essential ingredients and equipment from China — and to a lesser extent India — for the domestic production of synthetic opioids, the Fintrac alert says.

The intelligence agency also looked at data from foreign counterparts, assessments from other partners and open source information to help identify trends.

The alert says the illegal supply of fentanyl and other synthetic opioids in North America has been driven by the growing involvement of organized crime groups known to use shady financial services in the darker corners of the internet.

“These groups are importing or diverting essential precursor chemicals and lab equipment from China and other Asian countries for the production of illegal synthetic opioids,” the alert says.

“These threat actors are also using darknet marketplaces and virtual currencies to distribute and facilitate payments for fentanyl and other illegal synthetic opioids on an international scale, among other traditional methods.”

Fintrac says that in one case, an individual received a few hundred high-value email money transfers from a payment processor closely aligned with online gambling.

Such processors send email money transfers on behalf of individuals who deposit and withdraw funds from online casinos. The transactions appear as an e-transfer from the processor rather than as a transfer from the online gambling platform, making them seem more legitimate to banks or other financial institutions.

The transactions in question were still considered suspicious due to the client’s tendency to deal with people linked to fentanyl trafficking, the alert says.

It notes that prior to 2020, North America was primarily a consumer and destination continent for illicit-market opioids, specifically fentanyl.

“Fentanyl was imported directly and largely from China by consumers and dealers, typically using darknet marketplaces,” the alert says. “In more recent years, trafficking networks have increased the production of fentanyl and other synthetic opioids as well as their distribution both domestically and internationally from North America, including Canada, the United States and Mexico.”

This evolution from consumer to producer is also expected to happen in other international markets such as Europe, Australasia and South America, Fintrac adds.

The intelligence agency says transactions possibly tied to opioid production involved wire transfers to individuals in high-risk jurisdictions for the procurement and diversion of precursor and essential chemicals.

These places included China — specifically the Hebei and Hubei provinces — Eastern Europe and India. “Wire transfers to these jurisdictions were often routed through intermediary jurisdictions like Singapore, South Korea and Hong Kong to avoid detection,” Fintrac says.

Distribution networks are typically concentrated in large cities that serve as hubs for the production of fentanyl and the importation of precursors, essential chemicals and finished fentanyl, the alert says.

Shipping, freight-forwarding and logistic companies that conduct a large portion of their business in cash are potentially using the freight trucking industry in Canada to transport illicit synthetic opioids, it warns.

Point-of-sale and automated teller machine transactions indicate that opioids are primarily moving inland from distribution hubs in Vancouver.

From Vancouver, supplies are distributed to Calgary or Edmonton and then to Saskatchewan, Fintrac says.

“Other distribution networks, such as those originating in Ontario, see the flow of opioids from Toronto to surrounding areas such as London and Hamilton, prior to being transported to Thunder Bay and Winnipeg.”

Large exports of fentanyl are likely emanating from the lower B.C. mainland and the Greater Toronto Area, the alert adds. “Exports often leave these jurisdictions by marine, air cargo and land passenger modes.”