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Council calls on province to regulate money services businesses

By Hannah Scott, Local Journalism Initiative reporter

Published 11:32 PDT, Tue August 4, 2020

Richmond is anxious to stamp out money laundering.

City council, at its July 27 meeting, called on the province to create a regulatory body to oversee money services businesses. This would be in addition to the federal office (Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC).

“We need a robust licensing and regulatory structure in BC that has the authority and investigative tools to not just monitor and inspect money services businesses, but to detect underground businesses that support illegal activity,” said Mayor Malcolm Brodie. “While we continue to implement strategies that make Richmond a safe and resilient community, the control and enforcement of money services businesses is outside our mandate, so we are calling on the province to act and act now.”

Money services businesses, which exist outside the operations of traditional financial institutions, work with the foreign exchange of funds or alternate money transfer systems. In some jurisdictions, privately-owned automated teller machines (ATMs) as well as businesses who deal in virtual currency like bitcoin are considered to be money services businesses.

Council expressed concern that not enough is being done to limit illegal practices through money services businesses.

A recent provincial study on money laundering found that underground or undetected money services businesses functioned like international banks. As such, they provided liquidity for organized crime, gamblers and expatriates trying to avoid capital controls.

Council is sending a letter to the province requesting the establishment of a provincial regulatory body with the following conditions:

• A robust licensing regime similar to Quebec, which generates enough revenue to pay for the department that oversees it

• The authority and investigative tools to conduct inspections of money services businesses and detect suspected underground operations

• Adequate resources and trained staff to proactively conduct inspections of both licensed and suspected underground money services businesses

• The ability to develop and share intelligence on suspected underground money services businesses with local law enforcement, local government and FINTRAC

• The technology and staff trained in data analytics and intelligence analysis to monitor suspicious activity around MSBs

• Resources to provide education and outreach towards money services businesses operators as well as the banking and credit union industry regarding new trends, “red-flags” and modalities of criminal activity

• The ability to work with key government and private sector stakeholders to develop strategic plans, and establish clear performance metrics

Council also said the new body should have the mandate, strategic direction, resources and tools to proactively regulate money services businesses. It recommends that the definition of money services businesses be expanded to include White Label Automated Machines and armoured cars services.

There were 66 entities operating 75 money services businesses in Richmond in 2019, ranging from government agencies such as Canada Post to small retail operations.

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