‘Suspicious’ transactions flagged by feds
Cases involve the former chief financial officer at provincial tire recycling program and two auto scrapyards
The Canadian intelligence unit that probes money laundering and terrorism funding has uncovered millions of dollars of suspicious bank transfers that separately involve an individual and two firms with connections to Ontario’s tire recycling program.
Multiple transactions — including the purchase of gold bars and international wire transfers — have been discovered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). These “suspicious transaction reports” are now with the Toronto Police fraud squad.
One case involves the former chief financial officer of the Ontario Tire Stewardship. In another case, transactions involving two firms that do business with the recycling program were red flagged.
The common denominator is the stewardship, an agency created by the province to manage an annual $70-million recycling program. When consumers purchase a tire, they pay a fee to the program, which is charged with recycling discarded tires. A wide-ranging audit is looking into the stewardship and its former chief financial officer, Perminder Kandola, who was recently charged by the environment ministry with the alleged diversion of $346,565 of consumer recycling fees to his personal bank account.
FINTRAC’s job is to detect and prevent money laundering and the financing of terrorist activities. Banks must report suspicious or large cash transactions over $10,000 to FINTRAC.
Kandola first raised suspicions at a CIBC branch in early 2016 when he bought $69,805.88 in gold bars and was named in a Toronto Star story described as a “negative news article.” That report detailed a tire stewardship lawsuit alleging Kandola diverted money from a tire collector into a personal account called “Ontario Tire.”
Those two events caused CIBC to review their client’s banking activity — and pass information on to the federal agency.
Kandola had quit his job at the stewardship a few months before, in late summer of 2015. The bank discovered a flurry of activity beginning in early 2016, with a series of transactions involving seven different financial institutions. All told, the bank discovered Kandola had received $868,931 from various accounts and withdrawn $764,697. The bank’s review ran from Jan. 4, 2016 to April 27, 2016. The bank’s report to FINTRAC said: “In conclusion to our review of Mr. Perminder Kandola, we’ve found it unusual for the client to hold personal accounts with roughly 7 different financial institutions and to be pooling funds from all sources in a short period of time to his CIBC personal deposit accounts, which have not been opened for long (December 2015 and January 2016).”
The bank said it has concerns about the “original source of funds” and “how his wealth has been accumulated prior to reaching CIBC.”
The tire stewardship is undergoing an extensive audit that will deal with allegations of employee fraud and theft.
At no time does the FINTRAC report state that Kandola is involved in money laundering or terrorism. Sources have told the Star that Kandola, in the spring of 2016, paid back the $346,565 he is charged with diverting.
The Star sent detailed questions to Scott Hutchison, Kandola’s lawyer, but did not receive a response.
Det. Sgt. Ian Nichol of the Toronto Police fraud squad said he could not discuss an investigation that is ongoing.
A second part of the FINTRAC report deals with two auto scrapyards that do business with the Ontario Tire Stewardship.
FINTRAC, according to its reports, appears to have certain criteria that allows them to determine risk of money laundering or, in some cases, terrorism funding.
In the case of one auto recycling company in eastern Ontario, the FINTRAC report notes the tiny firm had almost $12 million flow in and out of its accounts in a recent eightmonth period — $2,663,388 of that from the Ontario Tire Stewardship. The report states that the firm is a “purported scrap metal and waste material recycling entity” that is a “higher risk commodity in money laundering terms.”
The other firm, in Hamilton, was highlighted in the report because of $1,043,481 in incoming wire payments from a used car and parts company in the United Arab Emirates. It also does business with the tire stewardship.
A suspicious transaction report said the Hamilton firm’s financial activity was reported to FINTRAC because of “suspicious incoming wires received from a high-risk jurisdiction (United Arab Emirates) . . . ” in U.S. dollars. The report went on to say that the transactions are similar to the “typology” of transactions described in a lawsuit that the U.S. government won against the Lebanese Canadian Bank.
In that lawsuit, the now-defunct Lebanese Canadian Bank paid a $102-million settlement after it was investigated for money-laundering and terrorism funding by the U.S. Drug Enforcement Administration and other government offices.
“Funds from Lebanon were sent to the U.S. to purchase used cars, the used cars were shipped to West Africa and sold for cash. The cash proceeds were then commingled with the proceeds from narcotics trafficking and transferred to Lebanon through bulk cash smuggling,” the FINTRAC report stated.
According to a 2011story in the New York Times, the bank’s books showed an intricate money-laundering scheme that washed drug money by “mixing it with the proceeds of used cars bought in the United States and sold in Africa.” Part of the profits, the Times said, went to Hezbollah, a terrorist organization.
The Star interviewed the owner of the Hamilton firm this week. He said he was unaware that his company was named in the FINTRAC report, but said his bank did cancel his business account in mid-2015 without warning and refused to tell him why.
The man said he has never met Kandola.
When the Star met with the owner of the Hamilton scrapyard he said he did business with a “completely trustworthy” car purchaser in the United Arab Emirates and has no involvement in money laundering or terrorism funding.
“I am not on any level involved with these guys who are killing innocent people and doing damage to the world,” he said.
FINTRAC’s media relations office did not return the Star’s calls.
FINTRAC appears to have certain criteria that allows them to determine money laundering risk