Administrative monetary penalty on Canada Changjiang Management Ltd.

From: Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

[2024-09-12]

Canada Changjiang Management Ltd., a money services business in Richmond, British Columbia, was imposed an administrative monetary penalty of $315,282 on February 11, 2024, for committing 6 violations. The violations were found during the course of a compliance examination in 2022. The administrative monetary penalty has been paid in full and proceedings have ended.

Nature of violation

Violation #1

Failure of a person or entity to report financial transactions that occurred in the course of its activities and in respect of which there are reasonable grounds to suspect that the transactions are related to the commission or the attempted commission of a money laundering or a terrorist activity financing offence, which is contrary to section 7 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Suspicious Transaction Reporting Regulations

Canada Changjiang Management Ltd. failed to submit 2 suspicious transaction reports, during the period of December 3, 2020 to May 19, 2021, where there were reasonable grounds to suspect that transactions were related to the commission or attempted commission of a money laundering or terrorist activity financing offence.

These transactions include:

• Instances with client conducting transactions at different physical locations
• Instances where client appears to be structuring amounts to avoid client identification or reporting thresholds
• Instances where transactions are being conducted with jurisdictions that are known to be at a higher risk of money laundering or terrorist activity financing

Violation #2

Failure of a money services business to report the receipt from a client of an amount in cash of $10,000 or more in the course of a single transaction, together with the prescribed information, which is contrary to subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and paragraph 28(1)(a) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

Canada Changjiang Management Ltd. failed to submit 3 large cash transaction reports during the period of December 7, 2020 to May 27, 2021, where they were in receipt of $10,000 or more in cash from a client. FINTRAC determined that, in 3 instances, Canada Changjiang Management Ltd. received 2 or more cash amounts totalling $10,000 or more by or on behalf of the same individual or entity within 24 consecutive hours of each other whereby the money services business did not submit a large cash transaction report.

Violation #3

Failure of a money services business to report the sending out of Canada of an electronic funds transfer of $10,000 or more in the course of a single transaction, together with the prescribed information, which is contrary to subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and paragraph 28(1)(b) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

Canada Changjiang Management Ltd. failed to submit 25 electronic funds transfer reports – outgoing during the period of December 7, 2020 to May 27, 2021, where they sent instructions electronically outside of Canada, in 2 or more transfers totalling $10,000 or more by or on behalf of the same individual or entity within 24 consecutive hours. FINTRAC determined that Canada Changjiang Management Ltd. was not consistently following their respective policies and procedures as well as failing to have implemented adequate review and identification of aggregate transactions totalling more than $10,000 in a 24-hour period.

Violation #4

Failure of a money services business to report the receipt from outside Canada of an electronic funds transfer of $10,000 or more in the course of a single transaction, together with the prescribed information, which is contrary to subsection 9(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and paragraph 28(1)(c) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

Canada Changjiang Management Ltd. failed to submit 4 electronic funds transfer reports – incoming during the period of January 22, 2021 to March 30, 2021, where they received instructions electronically from outside of Canada, in 2 transfers or more totalling $10,000 or more by or on behalf of the same individual or entity within 24 consecutive hours. FINTRAC determined that Canada Changjiang Management Ltd. was not consistently following their respective policies and procedures with respect to reporting of electronic wire transfers and failing to implement adequate review and identification of aggregate transactions totalling more than $10,000 in a 24-hour period.

Violation #5

Failure to develop and apply written compliance policies and procedures that are kept up to date and, in the case of an entity, are approved by a senior officer – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 71(1)(b)

FINTRAC determined that Canada Changjiang Management Ltd.’s compliance policies and procedures do not comply with the requirements of paragraph 71(1)(b) of the Regulations. Canada Changjiang Management Ltd.’s obligations under the Act and Regulations did not include all necessary measures in its documented compliance policies and procedures, or did not apply in practice the measures that were contained in its policies and procedures.

FINTRAC also confirmed that although the policies and procedures for identifying and reporting suspicious, large cash and electronic transfers were documented, Canada Changjiang Management Ltd. failed to follow their processes, resulting in unreported suspicious, large cash and electronic funds transfer transactions being submitted. Furthermore, FINTRAC also determined that the documentation submitted by Canada Changjiang Management Ltd. was not applied in practice related to the ongoing monitoring and special measures for high-risk client’s requirements.

Finally, its policies and procedures did not address ministerial directives and transaction restrictions and did not include the processes it would undertake for the review of its clients activities specific to domestic politically exposed persons, heads of international organizations, or family member or close associate of such persons.

Violation #6

Failure of a person or entity to assess and document the risk referred to in subsection 9.6(2) of the Act, taking into consideration prescribed factors, which is contrary to subsection 9.6(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and paragraph 71(1)(c) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

During the review period of December 1, 2020 to May 31, 2021, FINTRAC determined that Canada Changjiang Management Ltd. was not applying in practice its process of risk assessing its clients. Specifically, Canada Changjiang Management Ltd. does not assess the risk posed by each type of client to whom it offers services when a business relationship is formed. This is evidenced by its lack of risk assessment for both its products and delivery channels, as well as its omission of risk evaluation pertaining to the geographical locations of its clients and business relationships.

Moreover, it was observed that the ongoing monitoring records did not show any documented investigation, special measures taken, or risk mitigation actions executed. As a result, FINTRAC reached the conclusion that the money services business was not implementing its intended risk assessment strategy effectively.

Related link

• News Release : FINTRAC imposes an administrative monetary penalty on Canada Changjiang Management Ltd.