Penalties calculation examples

Failing to report a large cash transaction, an electronic funds transfer, or a casino disbursement are minor violations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Administration Monetary Penalties Regulations (AMP Regulations). In assessing the harm resulting from these violations, FINTRAC applies the following criteria:

Scenario 1: Unreported large cash transactions

An examination revealed that an RE did not report a cash transaction of $12,000 and another cash transaction of $10,000.

As outlined in the table above (Table 1), this type of non-compliance constitutes "Level 1" harm and incurs a penalty of $1,000 per instance, which is the prescribed maximum amount. Level 1 is the highest level of harm because failing to submit an LCTR to FINTRAC deprives it from information that would have been available for its analysis and therefore, constitutes a complete loss of financial intelligence.

In Scenario 1, there were two instances of large cash transactions that were not reported to FINTRAC and there were no mitigating factors to consider. It is the second time that FINTRAC will issue an AMP to this RE for unreported large cash transactions therefore; a one-third reduction applies which means paying 66% of the amount. The penalty is calculated as follows:

Scenario 2: Missing, incomplete or inadequate information in an LCTR

An examination revealed that three LCTRs submitted to FINTRAC had non-compliant information in Part D (information on the person conducting the transaction). Specifically, the conductor's given name is incomplete in all three reports.

Report 1:

Part D:
Conductor's given name:             J
Conductor's surname:                Smith
Conductor's date of birth:          -
Conductor's address:                -
Conductor's phone:                  -
      

Only the first initial of the conductor's given name was reported. Since no other information about the person conducting the transaction was provided, FINTRAC is unable to determine whether "J Smith" is in fact John Smith. This type of non-compliance prevents FINTRAC from identifying all parties to the large cash transaction, which corresponds to "Level 2" harm (Table 1). The penalty assigned to this violation is $750 per instance, before considering relevant mitigating factors.

Report 2:

 
Part D:
Conductor's given  name:            J
Conductor's surname:                Smith
Conductor's date of birth:          1981-10-23
Conductor's address:                111  Main St, Ottawa, ON, K1K 1K1
Conductor's phone:                  613-555-5555
      

In this report, only the first initial of the conductor's given name was provided. However, the conductor's date of birth, complete address, and telephone number were also reported, mitigating the harm done. While the non-compliance with reporting the given name of the person conducting the transaction is the same as in Report 1, the additional information provided allows FINTRAC to conduct its analysis to determine that a "J Smith", born on October 23, 1981, living at 111 Main St, Ottawa, ON, with telephone number 613-555-5555, conducted the transaction. However, the efficiency of FINTRAC's intelligence mandate is diminished due to the additional time required to conduct the analysis, thus causing "Level 4" harm. Consequently, the penalty assigned to this particular instance, before considering relevant mitigating factors, is $250.

Report 3:

 
Part D:
Conductor's given  name:            J
Conductor's surname:                Smith
Conductor's date of birth:          -
Conductor's address:                -
Conductor's phone:                  -
On behalf of:                       John  Smith's Business
                                    111  Main Street, Ottawa, ON, K1K 1K1
                                    613-555-5555

In this report, only the first initial of the conductor's given name was provided. However, third party information is provided which indicates that the transaction is being conducted on behalf of John Smith's Business and includes its complete address and telephone number, which mitigates the harm done. However, FINTRAC can neither identify the relationship between "J Smith" and "John Smith's Business", nor can it know whether "J Smith" is in fact John Smith at the address and telephone number provided. This corresponds to "Level 3" harm, which incurs a penalty of $500 before considering relevant mitigating factors.

In Scenario 2, there were three LCTRs with data quality issues and mitigating factors to consider. It is the third time that FINTRAC will issue an AMP to this RE for LCTR data quality issues therefore; no further reductions apply. The penalty is calculated as follows: