OTTAWA — Canada’s financial crime watchdog is warning that the “horrendous crimes” related to online child sexual exploitation, including the growing trend of imported child sex dolls, are escalating, while urging financial services companies to do more to help catch perpetrators.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) said Thursday that the number of online child sexual crimes is rising each year in Canada and throughout the world, but so is the severity of the crimes, the images and the videos involved.
The warnings are expected to add pressure on the federal government to step up its efforts to deal with the growing threat of online crime, particularly as it pertains to the safety of children.
In a new operational alert called Laundering the Proceeds of Online Child Sexual Exploitation, FINTRAC is urging businesses to do everything possible to help authorities crack down on the money laundering and other financial crimes that are typically part of the business model of these illegal online businesses.
Sexual extortion schemes that target Canadian children, the watchdog’s alert warns, are also on the rise and are often linked to organized crime.
Sarah Paquet, FINTRAC’s chief executive, said the alert is designed to support the efforts of Canada’s financial services sector and other businesses to protect the most vulnerable. “The exploitation of children is one of the most appalling crimes imaginable and it’s enabled by financial payments,” she was quoted as saying in a press release.
In the alert, FINTRAC also warns of the trend of child-like sex dolls, often imported from China or Japan, that can include children’s clothing and accessories. While the empirical evidence is incomplete, there is concern among some behavioural psychologists that the use of these dolls could be a gateway to even more serious, deviant acts.
The agency is asking financial services companies and other businesses to be on high alert for suspicious transactions that could be signs of illegal purchases or money laundering.
Transactions often involve money being sent, for example, to countries such as Thailand, the Philippines, India, South Africa, the Dominican Republic, Mexico and Cuba, where the legislation to protect victims is weaker.
Another characteristic is that these online criminal organizations are increasingly turning to virtual currencies to hide and launder their profits, particularly instant exchanges, mixers, tumblers and privacy coins. The transactions are often relatively small amount of money, less than $200.
Joseph Iuso, executive director of the Canadian Money Services Business Association, said online crime has shown no signs of slowing down and likely warrants more guardrails, including regulation. “It’s getting worse and will keep getting worse until something changes.”
Iuso, whose organization is a non-profit that
fosters payments compliance,
suggested that Canada could look more closely at Australia and the United Kingdom for how to use fines and other disincentives to encourage banks, casinos and other businesses to be more aggressive in monitoring questionable customer behaviour. “It seems to have slowed it down.”
The FINTRAC warning is the latest evidence that Canada — like virtually all other countries — is struggling to keep up with the growing problems of online crime and the money laundering that often accompanies it.
In its latest annual report, FINTRAC reported last month that it easily set a new mark last year in the number of cases that it sent to police for possible criminal investigation. The record-setting year reflects huge jumps in fraud, cyber ransomware, online child sexual exploitation and a range of other online crimes.
Just a week earlier, the agency announced that it had imposed its largest penalty ever on a Vancouver crypto currency company, more than nine times as much as the second largest ever.
Ottawa is trying to crack down on the growing problem.
Finance Minister François-Philippe Champagne said last month that the government will open a new Financial Crimes Agency to improve Canada’s ability to tackle online scams, money laundering and other types of fraud.
Prime Minister Mark Carney also vowed during the recent federal election campaign to criminalize and increase penalties for the non-consensual sharing of intimate images. Justice Minister Sean Fraser has said those changes will be part of an upcoming bill to fight online crimes against children.
The government is also expected to propose legislative changes to the Bank Act this spring to require banks and other financial institutions to play a larger and more proactive role in detecting and fighting various types of fraud.
National Post
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