Ottawa warns on Gold-backed Web trades
by investor on 26/05/08 at 8:00 pm
Canada’s financial intelligence agency warns that criminals may be exploiting Internet-based companies that convert cash into electronic gold, exposing a new front in the international effort to restrict terrorist financing and money laundering.
While other channels of money laundering are successfully being shut down, authorities are increasingly worried about a proliferation of “digital precious metals operators” websites that offer clients a chance to conduct Internet business in units backed by gold and silver rather than paper currencies.
The Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, says in a report these websites have “achieved critical mass on the Web” and are facilitating millions of transactions on the fringe of the international financial system – the equivalent of a Wild West where legitimate businesses, privacy-seeking individuals and criminals can mingle just out of reach of the law.
At stake is the effectiveness of the financial reporting rules that countries such as the United States, Britain and Canada enacted in response to the Sept. 11, 2001, terrorist attacks. A network that allows individuals to move money around the world means criminals can avoid commercial banks and other financial institutions required to turn over their records to the government.
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