UBC changed its cash payment policies amid dirty money laundering concerns in 2019

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UBC changed its cash acceptance policies at the end of 2019 as access to information request shows money laundering concerns stemming from letter from BC government .

Through an access to information request (FOI), The Ubyssey Obtained communications from UBC in response to BC government money laundering concerns. Although UBC could not identify any specific source of money laundering, the UBC treasurer called cash deposits through HSBC a “gray area”.

According to report, Lawyer and former RCMP Deputy Commissioner Peter M. German wrote on behalf of the Government of British Columbia in March 2019, post-secondary institutions could be a channel to bring in money. sale ”from various countries in Canada.

The report states that “some students only bring money to pay for their tuition and expenses, and sometimes try to pay several semesters in advance.” Later, students could withdraw from the institution and receive an institutional check for reimbursement of their fees.

Melanie Mark, Minister of Higher Education, Skills and Training, sent a letter in May 2019 to all public post-secondary institutions asking them to develop or review their financial policies and share their findings with the ministry.

UBC Vice President of Finance and Operations Peter Smailes responded to Mark’s letter on June 28, 2019, saying that “it would be very difficult for the situations cited in the Dirty Money report, part 2 [by Peter M. German] to be reproduced at UBC.

UBC Vice President of Finance Peter Smailes responded to Minister Melanie Mark’s letter in June 2019. Maneevak Bajaj, Source: FOI

In a statement to The Ubyssey As of September 16, 2020, university spokesperson Kurt Heinrich confirmed that UBC stopped accepting cash payments through HSBC in the fall of 2019.

“While HSBC has put money laundering protection procedures in place, the decision was made to provide an additional mechanism to reduce the potential risk of money laundering,” said Heinrich.

UBC also changed its cash handling policy in November 2019 to prevent large cash transactions from a single entity.

“No professor or UBC staff member may receive or process on behalf of UBC a single cash payment greater than CA $ 5,000 from any individual, business or entity. ” amended FM3 policy reads.

The risk of cash deposits

Banks must report cash deposits over $ 10,000 at the Financial Transactions and Reports Analysis Center of Canada (FINTRAC). But deposits made on campus at public post-secondary institutions do not have to be reported, as they are considered a legitimate source used to pay tuition fees.

However, German’s report noted that some international students may pay their tuition and other expenses in illegitimate cash, overpay into their student account, and then request a refund by check.

“On a recent occasion, a college encountered a student who had to pay fees of $ 150. The student showed up with $ 9,000 in cash in a gym bag and asked to deposit that amount minus the $ 150 owed, ”the report said.

The excess amount, in this case $ 8,850, is refunded to the depositor’s bank account. According to the report, this “refund” appears to be clean money on the bank statement because it is from an educational institution.

“Indeed, we asked the institution to act like a bank”, we read in the report.

UBC responds to concerns

In a July 2019 statement to The UbysseyHeinrich said UBC had not directly accepted cash tuition fees for ten years. However, he clarified that students can pay their tuition fees at that time in cash through HSBC.

“While students can pay the tuition fee in cash or by check through HSBC, they must provide identification and a UBC student number,” he said.

Sharon Wilks, head of media relations at HSBC Canada, said HSBC takes money laundering seriously and large cash transactions automatically trigger a report to FINTRAC.

“We apply high anti-money laundering standards and controls in all of our activities,” Wilks said in an interview in 2019.

She said all normal banking procedures such as establishing customer identification apply to UBC student cash deposits.

However, according to JTF records, UBC Treasurer Yale Loh told Associate Vice President Government Relations Adriaan de Jager in a June 25, 2019 email that “[UBC’s] the practice is to return all payments made through HSBC (cash or check) by check ”- something Loh and vice president of finance and operations Peter Smailes were“ in favor of eliminating ”.

“HSBC is a little uncomfortable because students using the service may not be customers of HSBC and HSBC is technically supposed to ‘know’ everyone using its services,” Loh wrote in an email from May. 2019 to registration services and media relations.

The payment methods used by students to pay their tuition fees in 2019/20.

The payment methods used by students to pay their tuition fees in 2019/20. Maneevak Bajaj, Source: FOI

JTF records show the university received $ 21.7 million in tuition payments by cash, check or wire transfer in 2019/20, just under 3% of all payments received . UBC did not provide data indicating the number of cash-only deposits.

JTF records also indicated that cash payments to student housing and hospitality services, now student housing and community services, accounted for 0.5 percent of total payments.

According to FOI, there were only seven payments over $ 5,000 and the average cash transaction amount was $ 1,075. But with the amended FM3 policy in place, SHCS no longer accepts cash payments over $ 5,000.

Payments to student housing and community services by payment type.

Payments to student housing and community services by payment type. Maneevak Bajaj, Source: FOI

However, according to the UBC Extended Learning website, UBC Continuing Education always accepts cash payments directly. An email from Loh in November 2019 mentions that “payments for continuing education did not exceed $ 5,000 in the sample we reviewed.” The Ubyssey could not find any further correspondence on this subject after the specified date.

Heinrich said the HSBC changes will have little impact on students.

“Given the very small number of cash payments made to UBC through HSBC prior to the policy change, we don’t expect this change to negatively affect our students,” said Heinrich.


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