Criminal entities defrauded COVID-19 benefit programs: intelligence reports

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Ottawa — Canada’s financial intelligence branch says various criminal entities have engaged in scams to access government pandemic aid in the first several months of the benefits’ launch.

According to a 2020 report by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) provided to CTV News, the Canada Emergency Response Benefit (CERB) and the Canada Emergency Business Account (CEBA) appear to be “knowingly and actively defrauded” by individuals, scammers or criminals and by criminal organizations.

The report found that those attempting to scam the CERB program did so by making multiple online applications for benefits using stolen personal information and social insurance numbers.

Criminal organizations would hire groups of individuals to cash the benefit cheques at “various locations around town.”

"In one instance, the reporting entity indicated that social media was used as the means of recruitment of these people,” the report reads.

CEBA-related fraud was carried out in a similar fashion, with the loan being transferred from the applicant’s business account to their personal account and then withdrawn in cash.

At the individual level, scammers would often purchase a single-load prepaid card and then upgrade it to a loadable card “upon which they arrange for the funds to be directly deposited to.” Individual fraud generally occurred among claimants who didn’t meet the application requirements for the benefits, including those living outside Canada and holding a job while also receiving income support, the report said.

The report also states that payments were made to those who were engaged in “illegal or suspicious financial activity.”

The CERB was created at the start of the pandemic to support individuals who were out of a job directly as a result of the COVID-19 pandemic. It later transitioned to the Canada Response Benefit. As of Nov. 7, nearly 2.3 million applicants had applied for the support, totaling $28 billion.

The CEBA, also implemented in the spring of 2020, provided interest-free loans to Canadian businesses and non-for-profits to help cover expenses. As of Nov. 4, 898, 114 businesses had accessed the loan, totaling $49 billion.

In the financial transaction records FINTRAC gathered from its reporting entities, it found 6,589 unique suspicious transaction reports (STR) relating to the pandemic, covering the period from Jan 1. to June 30, 2020. From these, the body identified 395 STRs with “narratives detailing various types of fraudulent activity relating to the CERB and the CEBA.”

The intelligence wing did not detail in the report the total amount money distributed through the CERB and CEBA that went to organized crime.