Unregistered Money Service Business Charged with Online Money Laundering Cannabis Scheme

Unregistered Money Service Business Charged with Online Money Laundering Cannabis Scheme

Moxipay Corporation has been charged as acting as an unregistered money service business facilitating the transfer of funds for unlicensed cannabis dispensaries. This online money laundering process allowed eight online dispensaries to collect funds from consumers and supply illegal cannabis. Moxipay is based out of Edmonton, Alberta where recreational cannabis is legal, but the dispensaries involved were unregistered and therefore illegal. Between January and December 2018, the unregistered money service business facilitated more than 84,000 transactions where almost $15 million was received. The investigation started when a financial institution noticed some suspicious transactions. The investigators identified that Moxipay was being used to transmit money for various illegal online dispensaries. Inspector Chad Coles of the Royal Canadian Mounted Police (RCMP) warned consumers not to use third party payment services like Moxipay and to instead put their trust in well known services like Visa and PayPal.

Because money was not directly flowing between consumers and the dispensaries, the RCMP consider Moxipay to be facilitating money laundering. The money all flowed through Moxipay. The eight online dispensaries remain under investigation. With more regions legalizing cannabis, governments must carefully consider the anti-money laundering (AML) procedures put in place to regulate theses markets. Also, new companies entering the cannabis industry must be careful to be sure they are compliant with AML and know your customer regulations. Regulators are already looking at real estate markets, arts & antiquities, and other industries for signs of financial crimes and methods of prevention. A new industry, especially one at risk for online money laundering, may be the next logical step.

 

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