Episode 6

The Importance of Suspicious Transaction Reporting in Criminal Investigations PART 2

Part 2 of "The Importance of Suspicious Transaction Reporting in Criminal Investigations": retired RCMP officer Stephen Scott shares a detailed case study that demonstrates how a single suspicious transaction report (STR) filed by a financial institution was crucial in unraveling a complex money laundering and organized crime investigation. The discussion highlights the importance of frontline reporting, the challenges in connecting the dots, and the significant impact that STRs can have in taking down criminal enterprises and seizing their illicit assets.

Key Takeaways:

  • A high-level criminal target came to the attention of law enforcement after being shot, leading to a deeper investigation into his activities and assets.
  • Despite no initial STRs being filed on the target, the investigation uncovered his lavish lifestyle and suspicious financial transactions, including a $1.6 million home purchase by a 23-year-old with no apparent legitimate income.
  • A single STR on an $88,000 Lamborghini purchase led to the identification of a bank account, which then allowed investigators to trace a web of financial transactions and accounts connected to the criminal enterprise.


  • The case underscores the importance of frontline reporting, as even small, seemingly insignificant transactions can be the key that unlocks a much larger investigation.


  • The discussion emphasizes that money laundering is not just about cash transactions, but also the acquisition of assets and the concealment of the true beneficial ownership, which can occur in small towns and communities as well as larger urban centers.


Stephen Scott

Company: S Scott (AML) and Security Consulting

Email: stephenscott@sscottamlsconsulting.com 

Bio 

Stephen Scott is a former member of the RCMP and in 2017 through 2021 was an investigations and training consultant to the UNODC GPML in Southern Africa. While in the RCMP, Stephen worked in the Calgary Integrated Proceeds of Crime AML Unit, INSET and the IMET JSIU where he managed and conducted money laundering, asset forfeiture, organized crime and terrorist financing investigations for 24 years. As a member of the RCMP IPOC AML Unit Stephen served as the FINTRAC liaison, CBSA currency interdiction contact and the “gatekeeper” to the Alberta Justice Civil Forfeiture program. He was a designer and facilitator on the RCMP Advanced and Basic Proceeds of Crime / ML courses as well as a facilitator at the Canadian Police College for the National Expert Witness training and Drafting Information to Obtain search warrants courses.

In 2019/20, Stephen Scott served on contract as a sworn member of the Royal Cayman Islands Police Service Bureau of Financial Investigations conducting international money laundering and asset forfeiture investigations. 

Currently, Stephen is a licensed Private Investigator in Alberta and is currently contracted to firms that conduct due diligence, background, OSINT and asset recovery investigations. 


Connect with Greg and Really Trusted at:

https://reallytrusted.com/

https://www.facebook.com/ReallyTrusted/


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Transcript
Greg Dent:

Hello and welcome back to the KYC podcast.

Greg Dent:

Today we're going to continue our episode

Greg Dent:

with Stephen Scott, retired RCMP officer,

Greg Dent:

and we're going to start with Stephen

Greg Dent:

telling us a step-by-step example of a

Greg Dent:

real-life case that he investigated and

Greg Dent:

where the FinTrack intelligence made a

Greg Dent:

difference in that case.

Stephen Scott:

So let's get to it made a difference in

Stephen Scott:

that case.

Stephen Scott:

So let's get to it.

Stephen Scott:

Had a case back several years ago where one

Stephen Scott:

of our biggest bad guys code trafficker,

Stephen Scott:

arms trafficker, weed trafficker here in

Stephen Scott:

Calgary came to the attention of the

Stephen Scott:

Alberta law enforcement response team when

Stephen Scott:

he got shot in the rear end.

Stephen Scott:

I was going to say I'll leave it at that.

Stephen Scott:

So all of a sudden they look up this guy

Stephen Scott:

and say who's this guy?

Stephen Scott:

Why did he get shot?

Stephen Scott:

You know, is this a gangland thing?

Stephen Scott:

Is this a bystander?

Stephen Scott:

Well, it turns out yeah he's a weed

Stephen Scott:

trafficker, coke trafficker, deals in arms

Stephen Scott:

and he's got quite a number of people

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working for him.

Stephen Scott:

So the alert team starts to work up an

Stephen Scott:

investigation.

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They call the proceeds crime team in to

Stephen Scott:

work with them.

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So we generally would assign one or two

Stephen Scott:

members to work with the project team

Stephen Scott:

that's doing this substantive case.

Stephen Scott:

So as they start to build up this case, one

Stephen Scott:

of the first things I did and another

Stephen Scott:

member of my team was send in this

Stephen Scott:

voluntary information record to FinTrack.

Stephen Scott:

Does FinTrack have anything on this person?

Stephen Scott:

We're investigating them for these

Stephen Scott:

particular reasons.

Stephen Scott:

I have reason to believe that they're

Stephen Scott:

laundering money and within those first

Stephen Scott:

couple of three, four weeks they have

Stephen Scott:

nothing.

Stephen Scott:

So there's been nothing entered by

Stephen Scott:

financial institutions, casinos, msbs and

Stephen Scott:

so on about the guy.

Stephen Scott:

So that's fine, we go on with our

Stephen Scott:

investigation.

Stephen Scott:

At the same time we learn that he's just

Stephen Scott:

finishing off building a property in

Stephen Scott:

Bearspaw, which is a very expensive

Stephen Scott:

development west of Calgary.

Stephen Scott:

It turns out the house was worth about $1.5,

Stephen Scott:

$1.7 million.

Stephen Scott:

The house was registered and this is

Stephen Scott:

important in his parents' names.

Stephen Scott:

Nominees are often used in all these

Stephen Scott:

properties.

Stephen Scott:

And whether it's a trust, whether it's a

Stephen Scott:

numbered company In commercial real estate,

Stephen Scott:

that's a different ballgame again, but

Stephen Scott:

personal properties.

Stephen Scott:

This kid was 23 years old, he didn't hold a

Stephen Scott:

job and then when we looked into the

Stephen Scott:

parents because you investigate the family

Stephen Scott:

in this case because everybody's part and

Stephen Scott:

parcel of this dad was a cabinet builder,

Stephen Scott:

cabinet maker, and mom worked in a hotel

Stephen Scott:

cleaning rooms Pretty tough to own a $1.6

Stephen Scott:

million property all of a sudden with those

Stephen Scott:

yeah without a 1.6 million dollar property

Stephen Scott:

all of a sudden, with those, yeah, without,

Stephen Scott:

uh, without a mortgage.

Stephen Scott:

Yeah, yeah, it must be nice and um, so

Stephen Scott:

we're thinking that that's not right.

Stephen Scott:

So, as the investigation goes on, we're

Stephen Scott:

we're learning more about this guy.

Stephen Scott:

Well, one day the surveillance team sees

Stephen Scott:

him driving a lamborghini um, not unheard

Stephen Scott:

of.

Stephen Scott:

He had a land rover.

Stephen Scott:

He had to throw the cars.

Stephen Scott:

They had.

Stephen Scott:

A tow business was their front business for

Stephen Scott:

laundering money.

Stephen Scott:

All their customers paid cash and all their

Stephen Scott:

customers paid in $20 bills.

Stephen Scott:

Thus he made these massive cash deposits in

Stephen Scott:

the banks Under the $10,000 threshold.

Stephen Scott:

No suspicious transactions came out of that

Stephen Scott:

either.

Stephen Scott:

That's another story.

Stephen Scott:

People knock realtors, but financial

Stephen Scott:

institutions, all these places still

Stephen Scott:

involve people.

Stephen Scott:

People have to make judgment calls.

Stephen Scott:

People have to move things along based on

Stephen Scott:

their knowledge, their training, their

Stephen Scott:

experience.

Stephen Scott:

So, anyway Lamborghini.

Stephen Scott:

We might forget where this guy's purchased

Stephen Scott:

this.

Stephen Scott:

Well, law enforcement here in Canada,

Stephen Scott:

alberta especially, has access to the

Stephen Scott:

actual bill of sale documents.

Stephen Scott:

So reached out to the Alberta government

Stephen Scott:

special investigations unit, got a copy of

Stephen Scott:

the bill of sale.

Stephen Scott:

Turns out the fellow bought the car in the

Stephen Scott:

states eighty eight thousand dollars give

Stephen Scott:

or take there's transportation fees to

Stephen Scott:

bring it back here.

Stephen Scott:

I think that was close to twenty bill of

Stephen Scott:

sale says on it this was paid for in full

Stephen Scott:

took a chance.

Stephen Scott:

We called the dealership out there,

Stephen Scott:

explained who we were and what we did.

Stephen Scott:

We're a little concerned that the

Stephen Scott:

dealership out there explained who we were

Stephen Scott:

and what we did.

Stephen Scott:

We were a little concerned that the

Stephen Scott:

dealership may tip off our guy One of those

Stephen Scott:

judgments you make in a case like this.

Stephen Scott:

We generally do investigations like that

Stephen Scott:

after takedown or after the arrests so the

Stephen Scott:

bad guy can't get rid of all of his assets.

Stephen Scott:

So, that said, determined that you know,

Stephen Scott:

maybe this fellow has sent electronic fund

Stephen Scott:

transfer to the US and that will have been

Stephen Scott:

captured by FinTrack, sent off my VER to

Stephen Scott:

FinTrack again Within two days I did get a

Stephen Scott:

disclosure back on the one transaction that

Stephen Scott:

would never have come out otherwise because

Stephen Scott:

it was just an EFT for $8,000 and then

Stephen Scott:

transportation fees.

Stephen Scott:

But what that did was identify the

Stephen Scott:

financial institution where this guy sent

Stephen Scott:

the EFT from One of the big five banks in

Stephen Scott:

Canada.

Stephen Scott:

We already knew about another bank that

Stephen Scott:

hadn't given us anything.

Stephen Scott:

We'd executed production orders.

Stephen Scott:

We'd been through his accounts, his

Stephen Scott:

business accounts.

Stephen Scott:

We didn't like what we saw, but it had

Stephen Scott:

nothing to do with the property.

Stephen Scott:

So that one STR led to the disclosure,

Stephen Scott:

which led to identifying a bank account.

Stephen Scott:

So at that point we have to search the bank

Stephen Scott:

accounts that are associated to that STR,

Stephen Scott:

and what we do is start with a request, the

Stephen Scott:

client profile, and the client profile

Stephen Scott:

provides all the accounts that the person

Stephen Scott:

has and all the joint accounts, and so on.

Stephen Scott:

So with that client profile and learning

Stephen Scott:

that he had six or seven accounts

Stephen Scott:

associated to him and his family, we

Stephen Scott:

searched all those accounts.

Stephen Scott:

We got boxes of documents but what that did

Stephen Scott:

was identify the parents' accounts, the

Stephen Scott:

grandparents' accounts, his brothers'

Stephen Scott:

accounts, his accounts, and each and every

Stephen Scott:

one of them had a connection to building

Stephen Scott:

his house.

Stephen Scott:

The contractors were primarily.

Stephen Scott:

We learned from there and we learned after

Stephen Scott:

our arrests and searches.

Stephen Scott:

At the end of the day, but building towards

Stephen Scott:

that, there were checks made out to certain

Stephen Scott:

you know, concrete contractors, roofing

Stephen Scott:

contractors, siding contract landscapers so

Stephen Scott:

that gave us all opportunities to interview

Stephen Scott:

people later to determine how they were

Stephen Scott:

paid.

Stephen Scott:

We also learned later that you know if the

Stephen Scott:

contract was $40,000, the check that was

Stephen Scott:

delivered was twenty thousand and twenty

Stephen Scott:

thousand dollars paid in cash, cash right.

Stephen Scott:

A lot of these guys are evading taxes on

Stephen Scott:

you and they like cash so you know, at the

Stephen Scott:

end of the day we got this house, it was

Stephen Scott:

worth a million in change.

Stephen Scott:

Um, again, he had no income, the parents

Stephen Scott:

had no income to be able to have paid.

Stephen Scott:

Close to a million bucks was the um with

Stephen Scott:

the building costs.

Stephen Scott:

Uh, we, we got his business.

Stephen Scott:

We got seven vehicles, we got a brightling

Stephen Scott:

watch, um jewelry, cash, a couple hundred

Stephen Scott:

thousand dollars in cash, and we would not

Stephen Scott:

have gotten most of that without that

Stephen Scott:

single str or eft, in this case, just one

Stephen Scott:

small report going to fintrack right and

Stephen Scott:

identifying all these other accounts.

Stephen Scott:

Now had an institution determined that this

Stephen Scott:

$4,500 deposit and $20 bills is not how tow

Stephen Scott:

companies work, you know.

Stephen Scott:

And this other $5,000 deposit, you know,

Stephen Scott:

three days later.

Stephen Scott:

And all these receipts they had an

Stephen Scott:

accountant.

Stephen Scott:

All the receipts were for cash, so hundreds

Stephen Scott:

and thousands of dollars in gas payments,

Stephen Scott:

expenses for the so-called business, were

Stephen Scott:

all in cash.

Stephen Scott:

The accountant should have done something

Stephen Scott:

as well and should have submitted an STR.

Stephen Scott:

Had they submitted those STRs, all that

Stephen Scott:

information would have come to us quicker

Stephen Scott:

because contract had to revert to begin

Stephen Scott:

with.

Stephen Scott:

That stays in your database.

Stephen Scott:

Police are working on it.

Stephen Scott:

If the STR gets sent to them boom, they're

Stephen Scott:

going to send something back right away.

Stephen Scott:

So that turned our whole case around.

Greg Dent:

It was a single document like that yeah,

Greg Dent:

it's interesting and to me it perfectly

Greg Dent:

highlights this concept of the puzzle that

Greg Dent:

you're trying to build on the investigation

Greg Dent:

at the end that the frontline people will,

Greg Dent:

unfortunately, will never know about and

Greg Dent:

can't know about, to be fair.

Stephen Scott:

But you never know.

Stephen Scott:

But you never know how important that

Stephen Scott:

little tiny thing is, very rarely is police,

Stephen Scott:

do we ever get a chance to thank people for

Stephen Scott:

helping out with like that.

Stephen Scott:

When it comes to us in the form of a

Stephen Scott:

disclosure with two dozen transactions,

Stephen Scott:

five dozen transactions on a ton of

Stephen Scott:

spreadsheets, you're just so overwhelmed by

Stephen Scott:

the work, overwhelmed by getting something

Stephen Scott:

to court, and then you're moving on to the

Stephen Scott:

next one.

Stephen Scott:

You don't get a chance to say, hey guys,

Stephen Scott:

thank you very much.

Stephen Scott:

Occasionally, back in the financial

Stephen Scott:

institution world the old days I guess,

Stephen Scott:

because I'm an old guy you know there's

Stephen Scott:

Christmas parties or there's stampede

Stephen Scott:

parties out here and you'd meet the

Stephen Scott:

corporate security people.

Stephen Scott:

You'd meet some of the money laundering

Stephen Scott:

people.

Stephen Scott:

We go to conferences, like the one coming

Stephen Scott:

up in Toronto or over there, and you meet

Stephen Scott:

the money laundering people there.

Stephen Scott:

The real estate representative show up for

Stephen Scott:

those sometimes and you meet people and

Stephen Scott:

then sometimes you can share, kind of like

Stephen Scott:

what I'm doing here is you know what this

Stephen Scott:

actually made a difference this was a

Stephen Scott:

particular case or you know it actually

Stephen Scott:

results in.

Stephen Scott:

You know, you talk to someone.

Stephen Scott:

They say I've got something that just

Stephen Scott:

doesn't seem right, steve, and they'll

Stephen Scott:

explain something to me and and my response

Stephen Scott:

will usually be yeah, I think that's

Stephen Scott:

suspicious.

Stephen Scott:

That's what we're sending in, and then we

Stephen Scott:

generate more, as tr is that way, strangely

Stephen Scott:

enough, or sometimes just leads.

Stephen Scott:

Well, they'll send something directly to us,

Stephen Scott:

but we'll also follow that up with.

Stephen Scott:

You should be sending something, by the way

Stephen Scott:

and then they start going through their

Stephen Scott:

records, maybe, and understanding the

Stephen Scott:

concept of reasonable grounds to suspect.

Greg Dent:

Or you know that money laundering isn't

Greg Dent:

just cash, you know, especially in real

Greg Dent:

estate business, it's, it's, it's the

Greg Dent:

person, it's their transaction, it's what's

Greg Dent:

not normal and in what normal people, you

Greg Dent:

know, versus what legitimate people do it's

Greg Dent:

funny in my work, uh, as we do consults

Greg Dent:

with, uh, with compliance officers as we

Greg Dent:

build out new programs for them, it's

Greg Dent:

fairly common, I would suggest, that we end

Greg Dent:

up having a conversation around a situation

Greg Dent:

that that brokerage had been involved in,

Greg Dent:

that they probably should have filed a

Greg Dent:

suspicious transaction report on, and I

Greg Dent:

would say probably more than 50% of the

Greg Dent:

consults we've had have led to us saying,

Greg Dent:

hey, you might want to reconsider this,

Greg Dent:

because I think there's probably reasonable

Greg Dent:

grounds to suspect that this situation

Greg Dent:

you've just told me about actually was a

Greg Dent:

suspicious transaction.

Stephen Scott:

Yeah, you know it's funny.

Stephen Scott:

You know we um want to talk money

Stephen Scott:

laundering as well.

Stephen Scott:

Sometimes there are the people that talk,

Stephen Scott:

you know, expanding on that, maybe the big

Stephen Scott:

picture, money laundering, the economic

Stephen Scott:

impacts, the price of houses in vancouver

Stephen Scott:

and toronto and so on.

Stephen Scott:

But there's also the local level and you

Stephen Scott:

know the smaller towns, smaller cities.

Stephen Scott:

If a drug dealer says easiest people to

Stephen Scott:

pick on, you know, is putting their money

Stephen Scott:

into institutions, you know they're getting

Stephen Scott:

away with that so far.

Stephen Scott:

But they want to buy property.

Stephen Scott:

They want to buy their own investment

Stephen Scott:

property or rental unit or two or three, or

Stephen Scott:

their own house and so on.

Stephen Scott:

You know, by submitting that STR you have

Stephen Scott:

that immediate impact, even at the small

Stephen Scott:

level.

Stephen Scott:

You know it isn't always the big picture

Stephen Scott:

stuff that I think about.

Stephen Scott:

In these cases as well, it's local police

Stephen Scott:

doing local work, seizing assets off of

Stephen Scott:

people locally.

Stephen Scott:

That shows to the local community that

Stephen Scott:

crime doesn't pay.

Stephen Scott:

I'm going to take your assets, I'm going to

Stephen Scott:

take your car, I'm going to take your house

Stephen Scott:

and if you've used that house to develop a

Stephen Scott:

meth lab or a marijuana grill or something,

Stephen Scott:

it's offense-related property and we're

Stephen Scott:

going to seize it for that reason too.

Stephen Scott:

But the person who maybe conducted a

Stephen Scott:

transaction to begin with says you know

Stephen Scott:

this person's a student, why are they

Stephen Scott:

buying a house?

Stephen Scott:

This person doesn't necessarily have

Stephen Scott:

employment.

Stephen Scott:

You know, we may not even have to ask them

Stephen Scott:

formal questions.

Stephen Scott:

You're having a conversation with the

Stephen Scott:

person that you're.

Stephen Scott:

You're, you know that you're acting on to

Stephen Scott:

purchase a house.

Greg Dent:

And if things just don't sound right, maybe

Greg Dent:

they aren't right and really you as a

Greg Dent:

frontline reporter don't need to go do the

Greg Dent:

investigation, you just need to submit it

Greg Dent:

and let FinTrack do what they will or won't,

Greg Dent:

but at least you'll have done your part by

Greg Dent:

flagging it, I think, is what I would say.

Greg Dent:

I want to come back to something you just

Greg Dent:

said, though small town thing, because I

Greg Dent:

get that.

Greg Dent:

I get that from a lot of people.

Greg Dent:

Oh well, I'm in small town manitoba,

Greg Dent:

saskatchewan, whatever.

Greg Dent:

I'm in small town canada, um, money

Greg Dent:

laundering doesn't happen here.

Greg Dent:

Yeah, would you agree with that statement,

Greg Dent:

steven?

Greg Dent:

I think I know the answer.

Stephen Scott:

Yeah, exactly no, no, no, because again

Stephen Scott:

it's that nebulous term, if, if you will,

Stephen Scott:

money laundering versus, you know,

Stephen Scott:

purchasing of assets and living a certain

Stephen Scott:

lifestyle that we can't aspire to ourselves

Stephen Scott:

because we work and earn legitimate money.

Stephen Scott:

So you know, the whole point of maybe

Stephen Scott:

conducting some money laundering or many

Stephen Scott:

money laundering investigations is to

Stephen Scott:

identify the assets at the other end of the

Stephen Scott:

person that they purchased, the investments

Stephen Scott:

that they purchased, the investments again,

Stephen Scott:

the lifestyle, the cars, the houses, the

Stephen Scott:

real property, the rental units.

Stephen Scott:

And people who make a lot of money in small

Stephen Scott:

towns spend their money potentially in

Stephen Scott:

small towns and if they're buying

Stephen Scott:

properties in these towns and they're

Stephen Scott:

buying those properties with dirty money,

Stephen Scott:

well, that asset can be subject to

Stephen Scott:

forfeiture.

Stephen Scott:

So really, money laundering is just a

Stephen Scott:

vehicle of few loads that proceeds, a crime

Stephen Scott:

in motion to lead us to that asset, so we

Stephen Scott:

can seek forfeiture of that asset.

Stephen Scott:

Take that power.

Stephen Scott:

Base away from these bad guys that if they

Stephen Scott:

go to jail for that short time that they

Stephen Scott:

seem to get for trafficking two or three

Stephen Scott:

years we don't want them to come back and

Stephen Scott:

still own that house, right.

Stephen Scott:

I don't want them to sell that house in the

Stephen Scott:

meantime.

Stephen Scott:

Put that money in the bank or an investment

Stephen Scott:

while they're in jail so when they get out

Stephen Scott:

they can start up again.

Stephen Scott:

You know, with with cash and with assets

Stephen Scott:

behind.

Stephen Scott:

So you know that's where the small town

Stephen Scott:

comes into it.

Stephen Scott:

I think more they wander their money to buy

Stephen Scott:

assets.

Stephen Scott:

But you know there's also investment

Stephen Scott:

properties in smaller towns.

Stephen Scott:

You know central BC through.

Stephen Scott:

You know call it Vernon, call it Kelowna,

Stephen Scott:

call it.

Stephen Scott:

Well, it's a big place now but you know

Stephen Scott:

these small towns there are cottages, there

Stephen Scott:

are real estate or there are commercial

Stephen Scott:

properties that are being bought up these

Stephen Scott:

days.

Stephen Scott:

Buy up wineries if you will.

Stephen Scott:

We're just down in the new soya's area.

Stephen Scott:

What's to say?

Stephen Scott:

You know, so some kleptocrat or oligarch

Stephen Scott:

from from overseas doesn't want to drop,

Stephen Scott:

you know, 500 million dollars and buy a

Stephen Scott:

winery.

Stephen Scott:

That's pretty nice dirty money, yeah, yeah

Stephen Scott:

yeah, so it's even more than just small

Stephen Scott:

town.

Greg Dent:

But those are small areas, but there's

Greg Dent:

opportunity for big investments as well,

Greg Dent:

yeah, well, and I think the point really is

Greg Dent:

to make crime, not pay.

Stephen Scott:

Yeah.

Greg Dent:

And that's the objective.

Greg Dent:

Lovely Well, thank you for that story.

Greg Dent:

I really appreciate it.

Greg Dent:

I don't want to take too much more time

Greg Dent:

from our audience if so, but I did want to

Greg Dent:

give you an opportunity.

Greg Dent:

Was there one other like quick message that

Greg Dent:

you thought was really important that you

Greg Dent:

hadn't had a chance to talk about through,

Greg Dent:

uh, through the course of the conversation?

Stephen Scott:

um, yeah, maybe I touched on it a bit

Stephen Scott:

earlier that you know too many or too often

Stephen Scott:

we associate money laundering with, with

Stephen Scott:

cash.

Stephen Scott:

I guess, and and again with um, what the

Stephen Scott:

Colin Commission talks about and what's

Stephen Scott:

been in the media lately, it is that big,

Stephen Scott:

nebulous, big picture problem.

Stephen Scott:

As opposed to, it impacts us locally, it

Stephen Scott:

impacts us domestically and so on.

Stephen Scott:

So it's something that's more than that.

Stephen Scott:

It is about the assets, it is about the

Stephen Scott:

people, it is about the underlying crime.

Stephen Scott:

But because people associate it with cash,

Stephen Scott:

they're not always thinking well,

Stephen Scott:

transactions are suspicious and who may be

Stephen Scott:

suspicious.

Stephen Scott:

Our biggest issues in law enforcement, and

Stephen Scott:

even all of legal law enforcement in the

Stephen Scott:

time being is knowing who the ultimate

Stephen Scott:

beneficial owner of certain assets are.

Stephen Scott:

If realtors can come to that or do more

Stephen Scott:

investigation to determine that the

Stephen Scott:

ultimate beneficial owner might be a

Stephen Scott:

politically exposed person who's been

Stephen Scott:

sanctioned by the Russians, might be an

Stephen Scott:

oligarch, a kleptocrat, somebody who's

Stephen Scott:

stolen billions from their country's oil

Stephen Scott:

reserves, and so on, we need to know the

Stephen Scott:

ultimate beneficial owner.

Stephen Scott:

Something to keep in mind as well is the

Stephen Scott:

source of funds.

Stephen Scott:

Again, it doesn't have to be suspicious of

Stephen Scott:

the transaction itself, but where did the

Stephen Scott:

money come from?

Stephen Scott:

And that's when you question the people's

Stephen Scott:

employment, their status in Canada, their

Stephen Scott:

associates, if you've done any adverse

Stephen Scott:

media checks.

Stephen Scott:

Who had disperse and did they show up?

Stephen Scott:

Yeah, and a media check is having a drug

Stephen Scott:

trafficking conviction or being a member of

Stephen Scott:

the Hells Angels or a brother of the Hells

Stephen Scott:

Angels, because nominees again coming back

Stephen Scott:

to the ultimate beneficial ownership is one

Stephen Scott:

of our biggest concerns, so it's Source

Stephen Scott:

Funds, ubo and um, not just getting it out

Stephen Scott:

of your mind that it's always about cash

Stephen Scott:

and the transaction itself Now very quickly.

Stephen Scott:

The attempted transaction is important,

Stephen Scott:

though Someone does come to you as a

Stephen Scott:

realtor and say I've got $50,000 cash I

Stephen Scott:

want to put down, you're going to say no, I

Stephen Scott:

know I trust enough people.

Stephen Scott:

They're going to go no, no, no, go to the

Stephen Scott:

bank, get a draft, go to the bank, put it

Stephen Scott:

in an account, send me an e-transfer, get

Stephen Scott:

it into a large trust account.

Stephen Scott:

That's an attempted transaction, mind you.

Stephen Scott:

That should be suspicious.

Stephen Scott:

Yes, anyone that comes with that amount of

Stephen Scott:

cash in my world is suspicious.

Stephen Scott:

There's no excuse these days on why people

Stephen Scott:

are transacting that amount of money

Stephen Scott:

anymore.

Greg Dent:

I rarely have $20 cash in my wallet.

Greg Dent:

These days, it's all plastic.

Stephen Scott:

I've laundered my own money in banks and

Stephen Scott:

you're taking out money to do undercover

Stephen Scott:

buys.

Stephen Scott:

That don't happen and you go back to

Stephen Scott:

another branch of the same bank because the

Stephen Scott:

government used to deal with it.

Stephen Scott:

And also you walk in with forty thousand

Stephen Scott:

dollars and back in the day I had the hair

Stephen Scott:

and the beard nice, yeah heller looks at

Stephen Scott:

you and goes I don't think so well, I'll

Stephen Scott:

take that, but let me just file this

Stephen Scott:

paperwork over here.

Greg Dent:

I've had paperwork filed.

Greg Dent:

even though there's my ID, there's my badge,

Greg Dent:

I do want to build on something you said,

Greg Dent:

though, because what you just said is

Greg Dent:

important for people to hear.

Greg Dent:

The nature of and I guess what I want to

Greg Dent:

say is the nature of being a realtor or a

Greg Dent:

mortgage broker is that you're in these

Greg Dent:

very personal relationships and as a result

Greg Dent:

of that personal relationship, you often

Greg Dent:

have information that nobody else in the

Greg Dent:

world will have access to.

Greg Dent:

When I go shopping with a client, if the

Greg Dent:

father is the one actually there hovering

Greg Dent:

over the shoulder telling their kid what

Greg Dent:

they can and can't buy, that might be weird,

Greg Dent:

but I'm the only one who would ever see

Greg Dent:

that, because nobody else is a party to

Greg Dent:

that conversation and to those flip that

Greg Dent:

around, greg.

Stephen Scott:

And what probably is more suspicious is, is

Stephen Scott:

the kid telling the father sure you cannot

Stephen Scott:

buy.

Stephen Scott:

I've seen that with um vehicles.

Stephen Scott:

Yeah, the vehicle is in grandma's name.

Stephen Scott:

She's 67 years old, doesn't speak english,

Stephen Scott:

but it's it's a ferrari, it's a corvette

Stephen Scott:

yeah, so when you speak to the, the car

Stephen Scott:

dealer in this case, you know it.

Stephen Scott:

It's yeah, so-and-so.

Stephen Scott:

Came in with his mother but he did all the

Stephen Scott:

talking.

Stephen Scott:

He asked about the warranties and, oddly

Stephen Scott:

enough, the multimillion-dollar property

Stephen Scott:

there bill of sale.

Stephen Scott:

Every car was in his dad's name, right,

Stephen Scott:

every truck.

Stephen Scott:

But all the initials on the bill of sale.

Stephen Scott:

I don't want financing His initial, want

Stephen Scott:

financing his initials, his initials, yeah,

Stephen Scott:

so they put that together.

Stephen Scott:

So, yeah, it's um, you will see people up

Stephen Scott:

close and personal and you see how they

Stephen Scott:

it's, it's their behavior.

Stephen Scott:

Not necessarily you know who they are,

Stephen Scott:

their, their race, anything like that.

Stephen Scott:

It's what they do.

Stephen Scott:

That's different.

Stephen Scott:

That doesn't fit with what I'm going to do

Stephen Scott:

when I'm going to buy a small life and I

Stephen Scott:

meet a realtor, we do this.

Stephen Scott:

Hey, what do you guys do?

Stephen Scott:

Hey, I'm a retired, this is what I got you

Stephen Scott:

move on.

Stephen Scott:

It's normal conversation.

Stephen Scott:

You're much more intimate in that case and

Stephen Scott:

sometimes it's harder to pass information

Stephen Scott:

on.

Stephen Scott:

When you're intimate with people and you're

Stephen Scott:

friends with them, you humanize people and

Stephen Scott:

it does make it harder to send in something

Stephen Scott:

that's suspicious.

Stephen Scott:

But, on the other hand, realtors and all

Stephen Scott:

the other reporting entities are vulnerable

Stephen Scott:

to being abused by money lenders and

Stephen Scott:

criminals, people wanting to buy assets and

Stephen Scott:

investments, and it's been determined the

Stephen Scott:

world over for over 20 years.

Stephen Scott:

So it is.

Stephen Scott:

I'll say this and I'm not admonishing

Stephen Scott:

anybody it is time to get with the program

Stephen Scott:

now.

Stephen Scott:

There's enough bad guys buying property.

Stephen Scott:

We'll never stop at all.

Stephen Scott:

That said, you know an STR doesn't mean you

Stephen Scott:

don't make a sale.

Stephen Scott:

An STR doesn't mean you don't take on a

Stephen Scott:

client.

Stephen Scott:

It just means I think I have reasonable

Stephen Scott:

grounds to suspect it is like 25% of 100%,

Stephen Scott:

beyond a reasonable doubt.

Stephen Scott:

This just doesn't seem right.

Stephen Scott:

I believe they're laundering money or using

Stephen Scott:

this property to launder money, legitimize

Stephen Scott:

their dirty money or to flip it in the

Stephen Scott:

future.

Stephen Scott:

That said, if you've seen a property flip

Stephen Scott:

two days, flip it in the future.

Stephen Scott:

That said, if you've seen a property flip

Stephen Scott:

two days, you know, three days later, after

Stephen Scott:

the title's gone through, if something

Stephen Scott:

comes up in the land title registry that

Stephen Scott:

you happen to see, or they reach you again,

Stephen Scott:

reach out to sell a property again.

Stephen Scott:

You know things like that are suspicious

Stephen Scott:

and there's an obligation, a moral

Stephen Scott:

obligation if you will, you know and this

Stephen Scott:

is me moralizing as a cop to comply because

Stephen Scott:

of all the violence, all the violence, all

Stephen Scott:

the problems behind the scenes that we

Stephen Scott:

don't see.

Greg Dent:

Yeah, and from a fairly like I don't know,

Greg Dent:

this is crass, but I'm going to say it

Greg Dent:

anyway.

Greg Dent:

As a salesperson, you can still go cash

Greg Dent:

your check, You're still going to sell that

Greg Dent:

property, even though you're filing a

Greg Dent:

suspicious transaction report.

Greg Dent:

Oh, I mean look again it's a little crass,

Greg Dent:

but I think it's still true and I guess

Greg Dent:

people should take some.

Stephen Scott:

It's 100% true, because financial

Stephen Scott:

institutions deal and that's coming back

Stephen Scott:

very briefly, slightly different topic, but

Stephen Scott:

included everything that they should be

Stephen Scott:

doing in their compliance regime is

Stephen Scott:

risk-based anyway.

Stephen Scott:

So you risk assessing your clients.

Stephen Scott:

Is this a high-risk person?

Stephen Scott:

Well, yeah, they're from Eastern Europe.

Stephen Scott:

They've just come to Canada or they've got

Stephen Scott:

a third party dealing on their behalf and

Stephen Scott:

we've never seen them.

Stephen Scott:

They've bought a third party dealing on

Stephen Scott:

their behalf and we've never seen them.

Stephen Scott:

They've bought this property site unsold,

Stephen Scott:

or it's a trust fund, or it's a trust and

Stephen Scott:

you're not seeing the owner behind that, as

Stephen Scott:

opposed to you.

Stephen Scott:

Know, I'd like to think I'm no risk to buy

Stephen Scott:

a place, but if all of a sudden, I turn

Stephen Scott:

around next week and buy a $2.5 million

Stephen Scott:

acreage outside of town here with cash, you

Stephen Scott:

know, maybe my nephew, who's our realtor,

Stephen Scott:

you know, might be going, hmm, yeah, maybe

Stephen Scott:

he would send something in, unless I have

Stephen Scott:

to say, hey, man, I won a lottery and you

Stephen Scott:

know.

Stephen Scott:

Even then, you know.

Greg Dent:

So what I'm getting at is um, actually, I

Greg Dent:

got, I got kind of sidetracked, greg,

Greg Dent:

excuse me, that's okay it's funny because

Greg Dent:

one of my favorite things I like to talk

Greg Dent:

about is when I bought the home I'm

Greg Dent:

currently talking to you from, uh, my wife

Greg Dent:

and I toured it for maybe 15 minutes,

Greg Dent:

probably 10 to 15 minutes.

Greg Dent:

We walked outside, wrote an offer for more

Greg Dent:

than full price subject free and had bought

Greg Dent:

this home four hours later.

Greg Dent:

Well, speed of transaction.

Greg Dent:

There's a flag uh, that's a pretty big flag,

Greg Dent:

in fact.

Greg Dent:

Paying over over list that's a big flag,

Greg Dent:

like really less so.

Greg Dent:

Paying over over list that's a big flag,

Greg Dent:

like really less so these days but yeah.

Greg Dent:

Yeah, and and it occurred to me, as I mean

Greg Dent:

I've often thought about that since that

Greg Dent:

somebody probably should have filed a

Greg Dent:

suspicious transaction report on me.

Greg Dent:

Not that I was laundering money, I was

Greg Dent:

responding to the market conditions.

Greg Dent:

I had perfectly good reason to do what I do

Greg Dent:

is doing was doing.

Stephen Scott:

But there's some big str flies, yeah, but

Stephen Scott:

that goes into the risk assessment.

Stephen Scott:

Um, my wife and I were looking at a condo,

Stephen Scott:

potentially on behalf of her daughter, and

Stephen Scott:

you know, hey, we're gonna ask market price

Stephen Scott:

and slightly more if necessary.

Stephen Scott:

Apparently there's 10 offers before we even

Stephen Scott:

made a call.

Stephen Scott:

You know so.

Stephen Scott:

But it would have been done.

Stephen Scott:

Hey, I can close it.

Stephen Scott:

This was like a sunday called, called my

Stephen Scott:

nephew and said this is what we want to do.

Stephen Scott:

He calls back on Monday and says this is

Stephen Scott:

the case and I said look, tell them I'll

Stephen Scott:

close on Wednesday.

Stephen Scott:

Yeah, I can pay full price for this right

Stephen Scott:

now, just pull out some savings and so on.

Stephen Scott:

So, yeah, again part of the risk assessment.

Stephen Scott:

That's where I got sidetracked earlier, if

Stephen Scott:

you will.

Greg Dent:

No way.

Stephen Scott:

You're assessing everybody you deal with

Stephen Scott:

and you're documenting that risk assessment

Stephen Scott:

and you're documenting that risk assessment.

Stephen Scott:

It shouldn't be a tick box type of thing,

Stephen Scott:

but you can make it easy and make it that

Stephen Scott:

way though.

Stephen Scott:

You know where are they from, you know

Stephen Scott:

what's their source of funds the questions

Stephen Scott:

that we put together earlier and if there

Stephen Scott:

are actual indicators or terminology that

Stephen Scott:

people can use.

Stephen Scott:

You know this money came from a

Stephen Scott:

jurisdiction of concern or we don't know

Stephen Scott:

the person's source of funds.

Stephen Scott:

That's the type of information a slightly

Stephen Scott:

different topic that goes into the SDR, but

Stephen Scott:

it becomes really helpful.

Stephen Scott:

It will generate interest by that FinTrack

Stephen Scott:

analyst when people use that terminology

Stephen Scott:

properly too.

Greg Dent:

Yeah, no, this is great.

Greg Dent:

Thank you so much.

Greg Dent:

I really appreciate hearing from the other

Greg Dent:

side of the front lines, because it really

Greg Dent:

does address something that a lot of our

Greg Dent:

clients often ask about, which is, I feel

Greg Dent:

like I'm just shouting into the wind with

Greg Dent:

this stuff, and to hear you talk through

Greg Dent:

how important the data that is coming

Greg Dent:

through Fintrack can be to actually solving

Greg Dent:

real-world bad crime is, I hope, helpful

Greg Dent:

and, to me, is encouraging, and I think

Greg Dent:

people will generally get some value out of

Greg Dent:

that.

Greg Dent:

So thank you for being able to do it.

Stephen Scott:

And, if I may finish, every single case,

Stephen Scott:

like I say, will include a FinTrack

Stephen Scott:

disclosure.

Stephen Scott:

These days, every major project, every bad

Stephen Scott:

guy, every fraud, every whatever, and

Stephen Scott:

buried within that are STRs from other

Stephen Scott:

reporting entities that give us leads that

Stephen Scott:

take us further, because really, the only

Stephen Scott:

way to go after these guys is to seize

Stephen Scott:

their assets and take that power away from

Stephen Scott:

them.

Stephen Scott:

Crime shouldn't pay.

Stephen Scott:

And these STRs from realtors and I'd love

Stephen Scott:

to see more of them because I know they

Stephen Scott:

will provide some great, great information

Stephen Scott:

and stuff that's collected will lead to so

Stephen Scott:

much more.

Stephen Scott:

And if, at a certain point, the police

Stephen Scott:

decide to execute a production order on a

Stephen Scott:

real estate office and I don't want to

Stephen Scott:

scare anybody by saying that you know what

Stephen Scott:

may be in that file may provide other leads

Stephen Scott:

as well, other financial accounts and so on.

Stephen Scott:

Because, again, it doesn't necessarily

Stephen Scott:

include bank accounts in these STRs if

Stephen Scott:

they're not known, if there's an attempted

Stephen Scott:

transaction, but you know, at some point in

Stephen Scott:

the future that evidence or that

Stephen Scott:

information is going to become evidence and

Stephen Scott:

it's going to be useful.

Stephen Scott:

Because, again, yeah, these pieces of a

Stephen Scott:

puzzle count and I'll stand by that after

Stephen Scott:

30 years of doing this.

Greg Dent:

No, and I think I will give you.

Greg Dent:

I will end this, I think, with a bit of a

Greg Dent:

positive note and a positive spin which is

Greg Dent:

in our work.

Greg Dent:

We're seeing already that the culture of

Greg Dent:

compliance that has been missing.

Greg Dent:

People are starting to get that message and

Greg Dent:

they're starting to see where they should

Greg Dent:

be filing STRs.

Greg Dent:

In our work we have a bunch of brokerages I

Greg Dent:

don't even it's double digits who are

Greg Dent:

waiting to file STRs.

Greg Dent:

Waiting because the web reporting thing

Greg Dent:

isn't back up yet.

Greg Dent:

Actually it is.

Greg Dent:

They have a phase two trial out of the new

Greg Dent:

web reporting I heard this last week, so

Greg Dent:

it's almost back up but phase two trial out

Greg Dent:

of the new rubber horn and I heard this

Greg Dent:

last week, so it's almost back up.

Greg Dent:

But anyhow, my point is waiting to file

Greg Dent:

pretty soon.

Greg Dent:

Um, that, uh, that, that.

Greg Dent:

But that wouldn't have been true 10 years

Greg Dent:

ago because it just there was not that

Greg Dent:

culture of compliance, there was not that

Greg Dent:

awareness of what should be happening yeah,

Greg Dent:

no, I can guarantee there's no better

Greg Dent:

feeling.

Stephen Scott:

You can get a fendrick disclosure that's

Stephen Scott:

got good information or good intelligence

Stephen Scott:

in it that we can use for something else.

Stephen Scott:

It's like, well, I got that guy now, or I

Stephen Scott:

got this, or I've got something new.

Stephen Scott:

People like I'll say, people like me, the

Stephen Scott:

dozens and dozens of money laundering,

Stephen Scott:

asset forfeiture people thrive on that.

Stephen Scott:

You know that's what makes our cases and

Stephen Scott:

when we present some of our proceeds of

Stephen Scott:

crime cases, money laundering cases, to

Stephen Scott:

these substantive teams, the drug teams,

Stephen Scott:

human trafficking teams and you show these

Stephen Scott:

people I've seized this house, I've seized

Stephen Scott:

this car, I've seized a donut shop years

Stephen Scott:

ago.

Stephen Scott:

That's another story.

Greg Dent:

That's a dangerous one for a police officer,

Greg Dent:

but anyhow.

Stephen Scott:

I'll leave that part alone.

Stephen Scott:

Yeah, we had a city police car pull up

Stephen Scott:

while we were executing the paperwork.

Stephen Scott:

A fellow looks at me and says so.

Stephen Scott:

I said hey, by the way, we just put a

Stephen Scott:

restraint against this property.

Stephen Scott:

He says what does that mean?

Stephen Scott:

I said well, the government kind of owns

Stephen Scott:

this now until we can sort out the fact

Stephen Scott:

that these people are drug traffickers and

Stephen Scott:

they get convicted and it gets forfeited.

Stephen Scott:

He looks at me and says so Steve, does that

Stephen Scott:

mean I get free donuts?

Stephen Scott:

He said not likely.

Stephen Scott:

Now, man, I'm the owner of this place.

Stephen Scott:

I'm going to pay as much money as I can.

Stephen Scott:

But no, I appreciate if everyone starts to

Stephen Scott:

do this, it keeps it going.

Stephen Scott:

As I say, it's.

Stephen Scott:

Hopefully some of my excitements come out

Stephen Scott:

here that I believe strongly in this and I

Stephen Scott:

still do it, and I know again the dozens

Stephen Scott:

and dozens of people that work these

Stephen Scott:

investigations just thrive on this, and it

Stephen Scott:

is really one of the most important ways to

Stephen Scott:

take down bad guys is to take their stuff

Stephen Scott:

and put them in jail.

Stephen Scott:

But it goes part and parcel.

Stephen Scott:

As far as I've seen, and it's proven around

Stephen Scott:

the world yeah, absolutely.

Greg Dent:

Well, thank you so much, Stephen, much

Greg Dent:

appreciated.

Stephen Scott:

Thank you for having me Talk again.

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