Administrative monetary penalty on Crystal Currency Exchange Inc.

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

[2025-05-29]

Crystal Currency Exchange Inc., a money services business in Burnaby, British Columbia, was imposed an administrative monetary penalty of $348,067.50 on March 5, 2025, for committing 9 violations. The violations were found during the course of a compliance examination. Crystal Currency Exchange Inc. has appealed the decision to the Federal Court.

Nature of violation

Violation #1

Failure 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 – Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act), section 7

FINTRAC's examination revealed that, in 3 instances, Crystal Currency Exchange Inc. failed to report financial transactions that occurred in the course of its activities and in respect of which there were reasonable grounds to suspect that the transactions were related to the commission of a money laundering or terrorist financing offence.

In each of the 3 instances, Crystal Currency Exchange Inc. had previously submitted a Suspicious Transaction Report to FINTRAC regarding suspicious transactions conducted by the client. However, Crystal Currency Exchange Inc. failed to report other suspicious transactions conducted by these clients that closely resembled those contained in the submitted suspicious transaction reports. Some of these unreported transactions occurred before Crystal Currency Exchange Inc. submitted the suspicious transaction reports but were omitted from the reports, while others were conducted after the suspicious transaction reports had been submitted but were not the subject of a subsequent Suspicious Transaction Report.

These 3 instances include indicators that Crystal Currency Exchange Inc. previously reported in suspicious transaction reports for those same clients. Specifically, instances where Crystal Currency Exchange Inc. did not consider:

an excessive large cash transaction volume
the customer being able to exchange large amounts of foreign cash
connections to jurisdictions that are known to be at a higher money laundering and terrorist financing risk
transactional activity that was inconsistent with the client's apparent financial standing
transactions where the client appears to be structuring amounts to avoid client identification or reporting thresholds

Failure to submit a subsequent Suspicious Transaction Report (Level 2 harm) represents severe non-compliance as it results in a loss of financial information, as the additional or new information is not available for FINTRAC's analysis to produce financial intelligence that can be disclosed for the investigation and prosecution of money laundering and terrorist financing offences.

In this case, violation #1 is classified by regulations as a Very Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #2

Failure to report the receipt of an amount of $10,000 or more in cash in a single transaction, together with the prescribed information – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 30(1)(a)

FINTRAC examined Crystal Currency Exchange Inc.'s reporting of large cash transactions. Of the transactions reviewed, FINTRAC identified a series of 2 cash transactions that Crystal Currency Exchange Inc. was required to report to FINTRAC because they were conducted within 24 consecutive hours by the same person and for the same beneficiary. These transactions represented one single transaction of $10,000 or more. At the time of the examination, Crystal Currency Exchange Inc. had not reported these transactions to FINTRAC in a Large Cash Transaction Report.

Failure to submit a prescribed report such as a Large Cash Transaction Report results in a loss of intelligence for FINTRAC which may prevent it from using that information to carry out its mandate per paragraphs 40 (b) and 40 (d) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

In this case, violation #2 is classified by regulations as a Minor violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #3

Failure to report the initiation of an international electronic funds transfer of $10,000 or more in a single transaction, together with the prescribed information – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 30(1)(b)

FINTRAC examined Crystal Currency Exchange Inc.’s reporting of outgoing electronic funds transfers. Of the outgoing wire transfers reviewed in the information provided by Crystal Currency Exchange Inc., FINTRAC identified 3 series of outgoing electronic funds transfer transactions conducted within 24 consecutive hours by the same person and for the same beneficiary. These transactions represented 3 single transactions of $10,000 or more. At the time of the examination, Crystal Currency Exchange Inc. had not reported these transactions to FINTRAC in electronic funds transfer reports.

Failure to submit a prescribed report such as an Electronic Funds Transfer Report results in a loss of intelligence for FINTRAC which may prevent it from using that information to carry out its mandate per paragraphs 40 (b) and 40 (d) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

In this case, violation #3 is classified by regulations as a Minor violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #4

Failure to report the final receipt of an international electronic funds transfer of $10,000 or more in a single transaction, together with the prescribed information – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 30(1)(c)

FINTRAC examined Crystal Currency Exchange Inc.’s reporting of incoming electronic funds transfers. Of the incoming wire transfers reviewed in the information provided by Crystal Currency Exchange Inc., FINTRAC identified 2 series of incoming electronic funds transfer transactions conducted within 24 consecutive hours by the same person and for the same beneficiary. These transactions represented 2 single transactions of $10,000 or more. At the time of the examination, Crystal Currency Exchange Inc. had not reported these transactions to FINTRAC in electronic funds transfer reports.

In this case, violation #4 is classified by regulations as a Minor violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #5

Failure of a person or entity to appoint a person to be responsible for the implementation of a compliance program – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(a)

Crystal Currency Exchange Inc.'s compliance policies and procedures, risk assessment, training program and prescribed review did not comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations in multiple respects. FINTRAC informed Crystal Currency Exchange Inc. of deficiencies in its compliance program following previous examinations in 2015 and 2017, but the compliance officer did not take any substantial measures to address the non-compliance.

When Crystal Currency Exchange Inc. provided its compliance program documentation to FINTRAC in the 2022 examination, none of these documents had been substantially modified from the versions Crystal Currency Exchange Inc. previously provided during the 2017 examination. FINTRAC did not observe any improvement in Crystal Currency Exchange Inc.'s compliance program elements between the 2017 and 2022 examinations.

During the 2022 examination, FINTRAC noted to Crystal Currency Exchange Inc. that its policies and procedures, risk assessment and training program gaps had been repeated from previous examinations and there had been no attempt to update the documents. Crystal Currency Exchange Inc.'s compliance officer acknowledged that they had had no time to correct the deficiencies, and would try to find someone else to perform these corrections. This absence of changes indicates that Crystal Currency Exchange Inc. did not have in place a person responsible for implementing its compliance program.

An effective compliance program begins with the appointment of a compliance officer; but simply appointing a person to this position is not sufficient to meet the objectives of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act). In order for Crystal Currency Exchange Inc. to meet the requirement, it must ensure that the compliance officer has adequate knowledge of the Act and associated Regulations, possesses the authority and has access to adequate resources to implement the compliance program.

In this case, violation #5 is classified by regulations as a Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #6

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 156(1)(b)

FINTRAC's review of Crystal Currency Exchange Inc.'s compliance policies and procedures found them to be incomplete and, in some cases, not applied. This was determined based on the results from the review of the documentation provided, interviews held with Crystal Currency Exchange Inc. appointed compliance officer during the examination, as well as testing of transaction records.

FINTRAC's review of Crystal Currency Exchange Inc. compliance policies and procedures found that the following obligations were not adequately addressed in regards to the following topics:

Politically exposed persons and heads of international organizations
Record keeping
Terrorist property reports
Ministerial directives
Business relationships
Ongoing monitoring

Further, Crystal Currency Exchange Inc.'s documented policies and procedures were not being applied in some respects, notably on suspicious transactions reporting and the 24-hour rule.

Policies and procedures are critical in a compliance program as they set out and communicate important principles and standards that employees and delegated persons with compliance responsibilities must meet in a consistent manner. Documented policies and procedures also serve to ensure clarity and consistency in business operations. Failing to develop, apply, and keep written compliance policies and procedures up to date can result in not meeting other requirements set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) and associated Regulations, and undervalues having in place sound business practices designed to minimize a business' exposure to money laundering and terrorist activity financing. Partially documented policies and procedures potentially leave employees, or those acting on behalf of the business, unaware of the exact actions to take or appropriate decisions to make, in order to comply, when specific situations arise in practice.

Violation #7

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 – Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act), subsection 9.6(1), and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(c)

FINTRAC's review of Crystal Currency Exchange Inc.'s risk assessment document found that Crystal Currency Exchange Inc. failed to fully assess and document the risk referred to in subsection 9.6(2) of the Act, taking into consideration the prescribed factors.

Specifically, Crystal Currency Exchange Inc.'s risk assessment document did not include any rationale explaining how Crystal Currency Exchange Inc. assessed risk for its clients and business relationships, nor did it assess risk related to the clients to whom Crystal Currency Exchange Inc. offers services when a business relationship is formed. The document did not include a rationale on how Crystal Currency Exchange Inc. assessed risk on the products, services and delivery channels it offers to its clients. Finally, while the document explained the geographic location of Crystal Currency Exchange Inc. branches, it did not address the risk related to these.

Assessing and documenting money laundering and terrorist financing risks ensures that reporting entities are aware of their potential exposure and vulnerability. Failing to assess and document the risks of money laundering and terrorist financing prevents reporting entities from identifying areas of its operations that are vulnerable to being exploited for these purposes, and prevents appropriate mitigation measures from being put in place. This can also lead to failing to identify high-risk clients and business relationships for which enhanced risk mitigation measures must be applied. This can further result in the failure to detect and report suspicious transactions to FINTRAC.

In this case, violation #7 is classified by regulations as a Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #8

Failure to develop and maintain a written, ongoing compliance training program – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraphs 156(1)(d) and (e)

During the 2022 examination, FINTRAC reviewed Crystal Currency Exchange Inc.'s compliance training program and plan. Crystal Currency Exchange Inc. provided FINTRAC with a document that referred to a number of training materials, although these materials were not provided to FINTRAC during the examination. FINTRAC determined that the documentation of Crystal Currency Exchange Inc.'s training program and plan was incomplete. Specifically, Crystal Currency Exchange Inc. did not keep any records of which employees had taken training or when the training was to take place. No documentation existed to demonstrate that any training had actually been provided. Further, Crystal Currency Exchange Inc.'s compliance policies and procedures, which Crystal Currency Exchange Inc. also used as training material, did not include several key obligations.

The purpose of a written ongoing compliance training program is to ensure that all employees, agents, mandataries and other persons authorized to act on Crystal Currency Exchange Inc.'s behalf understand the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act)and associated Regulations and follow the policies and procedures that have been established for compliance. It also ensures that employees, agents, mandataries and other persons authorized to act on a reporting entity's behalf understand money laundering and terrorist financing matters enough to be able to identify facts that may indicate financial transactions or activities related to these offences. Failing to develop and maintain a written ongoing compliance training program may result in the above listed purposes not being met over time, and consequently, failing to comply with the requirements under the Act and associated Regulations.

In this case, violation #8 is classified by regulations as a Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

Violation #9

Failure to institute and document thes prescribed review – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(f) and subsection 156(3)

FINTRAC's examination revealed that the 2021 prescribed two-year effectiveness review document provided by Crystal Currency Exchange Inc. only included a summary of the 3 compliance program elements, and briefly explained some of the topics of each element. The document did not demonstrate or document the testing of the effectiveness of Crystal Currency Exchange Inc.'s compliance program, nor demonstrate what corrective measures or follow-up actions were done to address any deficiencies found. Specifically, the 2021 documentation did not include the scope of the review or any rationale for the scope, the date of the review, the period covered by the review or the results of any tests performed during the review.

Crystal Currency Exchange Inc.'s documentation for its 2021 review was very similar to that of its 2018 review indicating that Crystal Currency Exchange Inc.'s 2021 review did not actually involve an assessment of the effectiveness of Crystal Currency Exchange Inc.'s compliance program.

Failing to conduct the prescribed review signals that the reporting entity may not be fulfilling one or more of its other requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations, by not having kept up to date with changes in the organization or external changes, such as new technologies in the financial sector and regulatory updates. Additionally, any gaps or ineffective processes in the existing compliance program may go undetected, leading to uncorrected non-compliance.

In this case, violation #9 is classified by regulations as a Serious violation. The imposed penalty takes into account the criteria in section 73.11 of the Act and section 6 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations.

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Administrative monetary penalty on Crystal Currency Exchange Inc.

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