JUST (jst) 
Canada Flags Cryptocurrency Use in Illicit Opioid Trade
The Canadian government has raised concerns about the growing use of cryptocurrencies in the illicit opioid trade, particularly in the trafficking and production of fentanyl and other synthetic drugs. A recent operational alert by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) highlights how virtual currencies, including Bitcoin, Ethereum, Tether, and USD Coin, are being leveraged to facilitate international drug trade while bypassing traditional financial systems.
Role of Darknet Marketplaces
FINTRAC’s findings emphasize the role of darknet marketplaces in connecting fentanyl producers and buyers. These platforms primarily accept cryptocurrencies and use escrow services to complete transactions. Once funds are released, they can be transferred to private wallets, laundered through mixing services, or converted to fiat currencies via exchanges, complicating efforts to trace the money trail.
Project Guardian
The report builds on work conducted under Project Guardian, a public-private initiative designed to combat the laundering of proceeds from synthetic opioid trafficking. Key participants include the Royal Canadian Mounted Police, Canada Post, Canadian Imperial Bank of Commerce, and the Canada Border Services Agency.
Project Guardian focuses on identifying financial transaction patterns linked to synthetic opioid trafficking. This includes monitoring payments for precursor chemicals, lab equipment, and shipping services.
Risk of Micro-Traffickers and Large-Scale Distribution Networks
Micro-traffickers, who often use postal and courier services to ship small quantities of drugs, are increasingly turning to virtual currencies for global sales. Meanwhile, large-scale distribution networks exploit freight corridors, particularly in Vancouver and Toronto, to transport precursors and finished opioids.
FINTRAC’s Alert
FINTRAC’s alert urges financial institutions to closely monitor cryptocurrency transactions associated with darknet marketplaces, privacy-focused smart contracts, or mixing services. These are often tied to synthetic opioid operations and represent a significant risk for facilitating illicit activities.
Businesses must recognize financial transactions related to the laundering of the proceeds of fentanyl and other illegal synthetic opioids.
Some key tips for financial institutions to prevent cryptocurrency laundering include:
- Monitoring cryptocurrency transactions associated with darknet marketplaces, privacy-focused smart contracts, or mixing services.
- Identifying financial transaction patterns linked to synthetic opioid trafficking.
- Reporting suspicious transactions to FINTRAC.
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