Administrative monetary penalty on Spence Diamonds Ltd.
[2025-09-23]
Spence Diamonds Ltd., also operating as Spence Diamonds, a dealer in precious metals and precious stones with locations in Vancouver, Langley, Calgary, Edmonton, Mississauga, Vaughan, Scarborough and Ottawa, was imposed an administrative monetary penalty of $264,000 on May 8, 2025, for committing 5 violations. The violations were found during the course of a compliance examination. Spence Diamonds will pay the administrative monetary penalty in full and proceedings have ended.
Nature of violation
- Violation #1
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Failure to submit suspicious transaction reports where there were reasonable grounds to suspect that transactions were related to a money laundering or terrorist activity financing offence – Proceeds of Crime (Money Laundering) and Terrorist Financing Act, section 7
FINTRAC determined that Spence Diamonds Ltd. failed to submit a suspicious transaction report where there were reasonable grounds to suspect that one or more transactions or attempted transactions were related to the commission or attempted commission of a money laundering or terrorist activity financing offence. FINTRAC’s examination identified transactions that were conducted and attempted by clients where numerous money laundering and terrorist financing indicators were present. These indicators included a customer conducting transactions at different locations or approaching different employees; the individual using a payment card that appeared to be altered or stolen; and the individual not wanting to buy or sell face-to-face and appeared nervous about information related to their identification. These indicators demonstrate that Spence Diamonds Ltd. had reasonable grounds to suspect that the transactions conducted by the clients were in line with those related to the commission or attempted commission of a money laundering or terrorist financing offence.
Violation #1 is classified by the 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
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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 Act (the Act), subsection 9.6(1) and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(b)
FINTRAC determined that Spence Diamonds Ltd. did not document the necessary measures in its compliance policies and procedures to meet all of its obligations under the Act and associated Regulations. Specifically, Spence Diamonds Ltd. did not include in its policies and procedures the requirements related to business relationships, ongoing monitoring, beneficial ownership, third party determination, politically exposed persons and heads of international organizations, and ministerial directives. Additionally, FINTRAC determined that Spence Diamonds Ltd. had incomplete documentation of its requirements for reporting suspicious transaction reports, terrorist property reports, large cash transaction reports and requirements for record-keeping.
Violation #2 is classified by the 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
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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, subsection 9.6(1) and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(c).
FINTRAC determined that Spence Diamonds Ltd.’s risk assessment document was incomplete, as Spence Diamonds Ltd. did not document procedures on how it identifies high-risk clients or what factors are considered in determining a client’s risk rating of low, medium or high. Furthermore, Spence Diamonds Ltd. failed to document additional controls, mitigation strategies, and enhanced or special measures for any clients deemed as high risk.
Violation #3 is classified by the 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
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Failure of a person or entity that has employees, agents or mandataries or other persons authorized to act on their behalf to develop and maintain a written ongoing compliance training program for those employees, agents or mandataries or persons - Proceeds of Crime (Money Laundering) and Terrorist Financing Act, subsection 9.6(1) and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations paragraphs 156(1)(d) and 156(1)(e).
Spence Diamonds Ltd.’s compliance training program was found to be incomplete as it failed to provide any documentation to demonstrate that training was delivered to all employees. The examination revealed that the training manual was also incomplete as it was missing key requirements such as know-your-client information, including client verification methods, business relationships, ongoing monitoring, beneficial ownership, and third party determination requirements. Additionally, the training manual did not include the steps to establish reasonable grounds to suspect threshold, how and when to submit a suspicious transaction report or a terrorist property report, examples of specific money laundering and terrorist financing indicators, ministerial directive requirements and record keeping requirements. Furthermore, Spence Diamonds Ltd. did not have a documented training plan that includes information on training recipients, topics and materials, methods of delivery, and frequency.
Violation #4 is classified by the 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 #5
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Failure of a person or entity to institute and document the prescribed review, Proceeds of Crime (Money Laundering) and Terrorist Financing Act, subsection 9.6(1) and Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, paragraph 156(1)(f).
FINTRAC determined that Spence Diamonds Ltd. failed to conduct a review of its compliance program to test the effectiveness of its policies and procedures, risk assessment and training program. Spence Diamonds Ltd. did not provide FINTRAC with any documents demonstrating that it had conducted a review of its compliance program.
Violation #5 is classified by the 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.
Related link
- Date Modified: