Administrative monetary penalty on Primary Capital Inc.
[2025-09-18]
Primary Capital Inc., an exempt market securities dealer headquartered in Toronto, Ontario, designated as a securities dealer, was imposed an administrative monetary penalty of $93,390 on May 15, 2025, for committing 4 violations. The violations were found during the course of a compliance examination. 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 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 determined that Primary Capital Inc. did not document and apply the necessary measures in its compliance policies and procedures to meet all of its obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.
FINTRAC’s examination determined that Primary Capital Inc. did not sufficiently develop and document its compliance policies and procedures in relation to reporting and know your client requirements. Primary Capital Inc. also failed to document and apply all requirements related to ongoing monitoring measures for its business relationships. Furthermore, the reporting timeframes and process for submitting suspicious transactions or attempted suspicious transactions and terrorist property reports were lacking or not accurately documented. Finally, its policies and procedures did not reflect measures to address the requirements under the Ministerial Directive on the Democratic People’s Republic of Korea (DPRK) published on December 9, 2017.
Violation #1 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 #2
-
Failure of a person or entity to assess and document the risk of a money laundering offence or a terrorist activity financing offence, taking into consideration prescribed factors – Proceeds of Crime (Money Laundering) and Terrorist Financing Act, subsection 9.6(2) and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(c) and subsection 156(2)
FINTRAC’s assessment revealed that Primary Capital Inc. failed to assess and document the money laundering and terrorist financing risks related to products, services and delivery channels, clients and business relationships, geographic locations, affiliates and subsidiaries, and any other relevant factors. Specifically, Primary Capital Inc.’s policies and procedures state that a risk assessment had been conducted, but there was no documentation to support this indication. Ultimately, Primary Capital Inc. did not conduct a risk-based assessment, which takes into consideration all prescribed factors, as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.
Violation #2 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 #3
-
Failure to institute and document the prescribed review of its policies and procedures, risk assessment and training program – Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(f) and subsection 156(3).
FINTRAC’s examination revealed that Primary Capital Inc. failed to conduct a review of its compliance program to test the effectiveness of its policies and procedures, risk assessment and training program. Primary Capital Inc.’s policies and procedures indicate that it will conduct a documented review of its compliance program to test for effectiveness, but there was no documentation to demonstrate that the prescribed review was conducted.
Violation #3 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 #4
-
Failure of a securities dealer to take reasonable measures within the prescribed period to determine whether a person for whom they open an account is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member of one of those persons or a person who is closely associated with a politically exposed foreign person – Proceeds of Crime (Money Laundering) and Terrorist Financing Act, subsection 9.3(1) and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, subsection 119(1).
FINTRAC’s assessment revealed that Primary Capital Inc. failed to take reasonable measures to determine whether a person is a politically exposed person, a head of an international organization, a family member of a politically exposed person or head of an international organization, or a close associate with a foreign politically exposed person. A review of sampled records revealed that Primary Capital Inc.’s politically exposed person and head of an international organization determination was inadequate, as it focused solely on identifying politically exposed foreign persons and their family members.
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.
Related link
- Date Modified: