Statement from the Director of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
As Canada's financial intelligence unit, FINTRAC ensures that businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act comply with their obligations under the Act and its regulations. The Centre also analyzes information and discloses financial intelligence to law enforcement agencies to assist their investigations of money laundering and terrorist activity financing.
More than 31,000 banks, casinos and other businesses across Canada have obligations under the Act and regulations, including: to develop and implement a compliance regime, verify their clients' identity, keep records and report certain transactions to FINTRAC.
As has been publicly noted, in April 2016, FINTRAC published the amount of the penalty ($1.15M) it levied against a Canadian bank and the compliance violations that led to that penalty.
In this specific case, I exercised my discretion under section 73.22 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in order to bring about improved compliance behaviour as quickly as possible and to send a message of deterrence to the 31,000 businesses subject to the Act. We have found that court proceedings may take many years with information often being sealed and outcomes uncertain.
In making this decision, I took into consideration the fact that the violations were of a technical nature and I emphasize that the penalty has nothing to do with money laundering or the financing of terrorism. I also took into account the measures that the bank took to address its client's activities, including: the identification of the client's transactions; reporting on previous transactions linked to the client's account; and the bank's engagement with Canadian and American law enforcement authorities in relation to the client's activities.
From the increased reporting that we have seen from businesses across the country and the discussions that we have had with them following the publication of the penalty, we believe our message of deterrence was heard very clearly.
However, in exercising my discretion to withhold the name of the bank, I understand that it may not have met public expectations in relation to openness and transparency.
As such, we are going to look to work with Finance Canada to review the legislation in relation to our penalty program. We are also examining our administrative monetary penalty policies to ensure, among other things, that they strike an appropriate balance between the need for transparency and the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
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