Money laundering is not just illicit drug cartel dollars washing through banks, businesses, and corporations. In Canada, the problem continues to spread into more benign activities, including that of collecting university tuition payments. The concern of possible money laundering has been brought to the forefront with several recent inquiries at different levels of government. Here is how it works: University students deposit thousands of “dirty” dollars in advance payment for multiple semesters. The payments are followed by refund requests, resulting in the dirty money now being cleansed and providing legitimacy to the illicit funds.
Garry W.G. Clement has over 45 years in the fight against money laundering. He is the former National Director of the Proceeds of Crime Program for the RCMP and the former Vice President of the Association of Certified Financial Crime Specialists. For the past 12 years, Clement has been a consultant for the financial services industry focusing on anti-money laundering (AML) and currently acts as a special advisor to the board of directors at the MTFX Group of Companies.
Clement points to two key reports on how money laundering has become entrenched in many major industry segments including higher education. First, the 2015 Charbonneau Commission concluded that money laundering throughout Canada is “far more widespread than originally believed”. Then he cites an investigation by Peter German of money laundering in higher education.
In many countries drug production and traffic, human trafficking, as well as cyber-crime syndication generate vast amounts of money, much of which is in cash. Couriers of that cash have been known to include foreign students coming to Canada to enroll in the country’s exceptional higher education system.
Clement advises that attacking the problem must begin with a potential risk assessment. Canada accepts students from throughout the world, and some of those foreign countries are the source of tainted money. Likewise, foreign tuition payments are continually on the rise. Universities must be on the lookout for students who want to make large cash tuition payments, especially in advance.
A May 2019 Global News article on Money Laundering announced a B.C. government campaign to ferret out money laundering through university fees. Highlights:
B.C. officials are requiring post-secondary institutions to take a close look at their financial policies. That review should be focused on ensuring that large cash payments for an individual student are not accepted.
The crackdown is on the heels of anecdotal complaints made to Peter German as part of his investigation of money laundering and its effect on the B.C. economy. Peter German reported that people “are paying thousands of dollars in cash for multiple semesters in advance and then seeking refunds by cheque".
Warned German, "Our post-secondary institutions must not be used to launder money, and we are asking them to review their policies to put a stop to it”.
Melanie Mark, B.C. Advanced Education Minister seconded German’s observation. Said Mark, “We need to protect post-secondary institutions as places of higher learning…not alleged places for organized crime to clean dirty money”.
Clement recognizes that money laundering “is a societal problem that can only be abated with the overall support of all sectors” including higher education. It is all about accepting responsibility. When identifying suspicious activity, anyone accepting cash has the burden of due diligence. Where did all that cash come from? Can you determine source of funds? Can you identify who is the ultimate beneficiary on student refunds? Solutions and best practices include questioning amounts of cash in excess of $8,000. When the amount is $10,000 or more, the transaction must be reported to FINTRAC.