In a takedown worthy of Hollywood, the RCMP followed suitcases filled with cash to dismantle one of the biggest money-laundering networks in Canada. It's not the traditional way to investigate dirty money, but it's paying off.
Last February, the Integrated Proceeds of Crime Unit (IPOC) in Montreal charged 19 people, executed 13 search warrants, and seized $10 million cash, eight properties valued at $20 million and eight bank accounts.
"In the past, we would get involved at the end of a drug investigation, identify the assets and take them away from the criminals," says RCMP Sgt. François-Olivier Myette, who led the investigation, dubbed Project Collecteur. "It's a new era for money laundering cases because we're now investigating the offence of money laundering instead of the assets."
Traditionally, when criminals make money from illegal activities, they use it to buy big ticket items such as houses, cars, boats and jewelry. Or, they reinvest it in new criminal activities and transfer the cash abroad to pay off suppliers.
They can't just put it in the bank since monetary transactions like these are traceable and Canadian banks report deposits of $10,000 or more.
In order to use the money without arousing suspicion, organized crime networks hire professional money launderers to clean dirty money through a series of transactions to make it seem like it came from a legitimate source of income.
IPOC is cracking down on the people providing the service to organized crime groups.
"The bottom line is that it's cash generated from drug offences," says Myette. "The best way to fight money laundering is to hit them at that level, when they have all this cash in their hands and they're trying to figure out what to do with it."
Acting on a single tip from the U.S. Drug Enforcement Administration in May 2016, IPOC began surveillance of a criminal network in Canada that was linked to an organization importing drugs from Columbia.
The Montreal and Toronto-based criminal network used what's known as an informal value-based transfer system to launder approximately $20 million internationally each month.
"They weren't actually transferring money from country to country but picking up cash locally and using other cash at their disposal internationally to pay off transactions," says Myette. "It's like putting a dollar in your left pocket and taking another dollar from your right pocket."
Most of the money was used to re-invest in illegal activities, including more drug importations.
The team used a multitude of investigative techniques to prove that the money came from illegal activities — and that the offenders knew it.
Police conducted several undercover operations, led hundreds of surveillances, installed GPS trackers on suspects' vehicles, obtained wire taps, mounted hidden cameras and handled covert vehicle and telephone searches.
In the process, IPOC witnessed more than 120 hand-to-hand exchanges of duffle bags and suitcases filled with hundreds of thousands of dollars in cash, in underground parking lots and other secret locations.
"It was ground breaking. We pretty much used all the tricks in the book," says Cpl. Nicolas St-Antoine, who took over leading the investigation after Myette.
The team's biggest challenge was proving the suspects were aware the money came from illegal activities, according to St-Antoine.
"It's really difficult because how do you get into somebody's head?" says St-Antoine.
He says by arresting secondary suspects, it set off panic throughout the network. As news of the arrests spread through the members, IPOC was listening to their conversations and gathering evidence.
Up to 35 officers at a time worked on the investigation, according to Cst. Stephanie Clayton, the file co-ordinator on the project, who was responsible for compiling anything that would be used as evidence against the offender — a process she refers to as disclosure. Clayton disclosed 88,000 case documents to the Crown prosecutors including investigators' handwritten case notes, several thousand multimedia files and four months' worth of electronic intercepts.
According to Myette, IPOC was motivated to change due to international scrutiny.
In June 2016, the Financial Action Task Force (FATF), an international organization that tracks money laundering worldwide, gave Canada a poor report card on its performance fighting money launderers and recommended stricter policies.
"We're trying something new and what we're doing now is working really well," says Myette.