Language selection

Government of Canada / Gouvernement du Canada

Search

Standing Senate Committee on Banking, Commerce and the Economy

Study matters relating to banking and commerce generally

Director's binder

November 7, 2024

On this page

Committee meeting details

You have been invited to appear before The Standing Senate Committee on Banking, Commerce and the Economy on matters relating to banking and commerce generally.

Your appearance is intended to discuss FINTRAC's role in the context of the committee's general mandate, particularly given the recent findings in the U.S. relating to TD Bank's anti-money laundering regime. The Committee has been advised that legislative limitations prevent FINTRAC from delving into specific details about individual reporting entities.

You will be appearing for one hour. You will have five minutes to provide opening remarks, followed by questions from Committee members.

Superintendent of Financial Institutions, Peter Routledge, is expected to appear before the Committee on the same subject. A summary of his testimony will be provided to you in advance of your appearance.

Logistics

You will be appearing on November 7, 2024 at 11:30 a.m. to 12:30 p.m. ET. The Committee will take place at 1 Wellington St., Room 110.

The Committee representative is:

Sara Gajic
(She / Elle)
Procedural Clerk

SENATE OF CANADA
Committees Directorate
c: 343-550-0954
Sara.Gajic@sen.parl.gc.ca

Committee member biographies

About the committee

The Standing Senate Committee on Banking, Commerce and the Economy has the mandate to study matters relating to banking, trade, commerce and the economy generally. The committee has conducted studies and examined bills in the areas of productivity, business investment, inflation, insolvency, taxation, financial sector reform, business trade, financial crimes and retirement.

The committee also routinely examines the subject matter of budget bills each year, although it is the Standing Senate Committee on National Finance who serves as the lead.

AML/ATF Regime members, as well as private sector stakeholders last appeared before this committee in May 2024 to discuss Bill C-69, the Budget Implementation Act 2024.

Note: Certain members of this committee may rotate in-and-out.

Breakdown of Senate groups

There are four recognized groups in the Senate to which Senators may choose to affiliate themselves. Senators can also remain non-affiliated, though there are no unaffiliated Senators in the BANC committee.

Canadian Senators Group (CSG): The Canadian Senators Group is the second-largest interest group in the Senate, at a present membership of 17. Having split from the ISG and acting as a 'counterweight' of the ISG, members of this group are also autonomous and may take diverse policy positions, though they generally take a heightened focus on regional issues.

Conservative Party of Canada (C): The Conservative Party of Canada is a Senate caucus with 14 present members. Unlike the other three recognized groups, this is the only group in the Senate that is formally tied to a federal political party. Senators in this group are likely to advance the interests and values of the federal Conservative Party of Canada.

Independent Senators Group (ISG): The Independent Senators Group is the largest group in the Senate, at a present membership of 39. Members of this group do not affiliate with any political party. Members of the ISG are autonomous and take policy positions as they see fit, but have joined together for purposes of logistics and ensuring that their legislative and investigative roles are conducted efficiently and effectively in the Senate.

Progressive Senate Group (PSG): The Progressive Senate Group has a present membership of 14. This group derives from the former Independent Liberal Senate Caucus, which disbanded in 2019 and reformed into a more encompassing group that independently advances progressive views, values, and philosophies. Members of this group are likely to advance progressive values, akin to (but not necessarily identical to) those of the federal LPC and NDP.

Canadian Senators group (CSG)

Senator Pamela Wallin, Chair of the Committee

Province of Saskatchewan | Canadian Senators Group (CSG)

Biography for Senator Pamela Wallin

Analysis

In FINTRAC's previous BANC appearance in 2021, Senator Wallin asked overarching questions about the prevalence of laundering activity in Canada, and why it has grown. In this appearance, she was generally supportive of strengthening the regime.

Senator Colin Deacon

Province of Nova Scotia | Canadian Senators Group (CSG)

Biography for Senator Colin Deacon

Analysis

Senator Deacon has used social media to publicly comment on the case of TD and money laundering, calling it "deeply troubling" for Canada's reputation and advocating for greater competition and innovation in the financial services sector in Canada. He also takes note of the role of regulation and the need for technological innovation in the industry, stating:

Our regulators need to change how they are regulating. Competition and disruptive alternatives to the status quo can no longer be pushed aside because of resistance from the big banks…

We must finally choose to prioritize the eradication of fraud and money-laundering here at home. Some early progress has been made from a policy standpoint, but the TD Bank case highlights an utter lack of operational progress. Let's decide today, to build the world's best and most innovative crime-fighting tools, and a financial innovation ecosystem that solves our own problems.

In Senate debates, Senator Deacon acknowledged the recent penalties imposed by FINTRAC against major banks in 2023-2024, but noted that they were "a paltry amount". He noted that [the 2024 Budget Implementation Act] "marks a positive step in reinforcing Canada's anti‑money laundering, or AML, regime, but it remains just a start." In the same remarks, he noted the gap in regulating lawyers, as well as the need for further regtech innovation in Canada, specifically pointing to Verafin as an example.

In previous Committee hearings, Mr. Deacon has posed questions on: cyber crime, fraud and digital identities; privacy legislation and implications for the AML/ATF regime; as well as beneficial ownership.

Conservative Party of Canada (C)

Senator Yonah Martin

Province of British Columbia | Conservative Party (C)

Biography for Senator Yonah Martin

Analysis

In debate in the Senate, Senator Martin has routinely inquired into the government's plans to address crime, in particular, auto thefts, as well as affordability and housing.

In debating recent budgetary bills, Senator Martin asked the RCMP about the effectiveness of recent legislative measures to investigate money laundering.

Senator Elizabeth Marshall

Province of Newfoundland and Labrador | Conservative Party (C)

Biography for Senator Elizabeth Marshall

Analysis

Ms. Marshall is a very experienced and very participative Senator who asks overarching questions about government funds, government debt, fiscal accountability and fiscal projections. Ms. Marshall appears to advocate fiscal stringency and in any cases of increased spending, Ms. Marshall may ask questions about whether specific levels of funding are realistic, reasonable, or have a justified impact.

Citing her background as an auditor, Ms. Marshall's general focus appears to be more on macro-level financial accountability issues.

In previous hearings, she has inquired about the extent of money laundering in Canada, the effectiveness of the AML/ATF Regime and measuring compliance with regulations.

Independent Senators group (ISG)

Senator Tony Loffreda, Deputy Chair

Province of Quebec (Shawinegan) | Independent Senators Group (ISG)

Biography for Senator Tony Loffreda

Analysis

Senator Loffreda served as the sponsor of Bill C-69 in the Senate. He has inquired into recent media coverage of administrative monetary penalties, the resilience of the Canadian banking sector and the federal AML/ATF regime. In particular, he sought insight into how private institutions were detecting and combatting illicit financing.

In committee, Mr. Loffreda has asked questions about the effectiveness of government programs, the impact of increases or reductions to government spending, the general state of the Canadian economy, housing affordability issues, as well as how Canada compares internationally on a variety of topics.

In the most recent proceedings in the Senate, Senator Loffreda has sought updates from the Government representative on the status of a Canadian financial crimes agency, as well as an environmental scan on the scope of money laundering in Canada and statistics on charges, prosecutions and convictions. In the latter question, Senator Loffreda cited the most recent National Inherent Risk Assessment (NIRA).

Senator Rosa Galvez

Province of Quebec (Bedford) | Independent Senators Group (ISG)

Biography for Senator Rosa Galvez

Analysis

In the Senate, Ms. Galvez has often advocated for environmental justice, environmental protection, among other natural resources and environmental topics. A second interest of hers is general affordability challenges. Ms. Galvez has also asked questions about the RBC-HSBC merger.

Senator Pierrette Ringuette

Province of New Brunswick | Independent Senators Group (ISG)

Biography for Senator Pierrette Ringuette

Analysis

In recent committee appearances, Senator Ringuette inquired into FINTRAC's ability to share information and, specifically proactive/spontaneous disclosures. She also inquired into Canada's record into prosecuting money laundering. In other appearances, she asked about administration and oversight of a beneficial ownership registry.

Senator Toni Varone

Province of Ontario | Independent Senators Group (ISG)

Biography for Senator Toni Varone

Analysis

In debating recent budgetary bills, Senator Varone inquired with the RCMP if the legislative measures related to information sharing would be sufficient to effectively investigate ML and TF. In that same hearing, Senator Varone asked the Privacy Commissioner about balancing individuals' rights and the pursuit of illicit activities.

Senator Varone sought, clarity through the Canadian Bankers' Association, as to how they use both automated and manual checks in detecting suspicious transactions.

Senator Varone has also used committee time to inquire into the effectiveness of a beneficial ownership registry, potential liabilities and the "piercing of the corporate veil".

Senator Hassan Yussuff

Province of Ontario | Independent Senators Group (ISG)

Biography for Senator Hassan Yussuff

Analysis

In committee, Senator Yussuff has noted the longevity of the AML/ATF regime, and asked how and why financial institutions are not compliant, specifically citing TD as an example.

Progressive Senate group (PSG)

Senator Daryl S. Fridhandler

Province of Alberta | Progressive Senate Group (PSG)

Biography for Senator Daryl S. Fridhandler

Analysis

Having been sworn in in mid-September, Senator Fridhandler does not an extensive record of interventions. Given his legal background, practice in corporate and business law and service with police commission, he may be interested in some of the legislative measures of the AML/ATF regime.

Opening remarks by Sarah Paquet, Director and Chief Executive Officer, Financial Transactions and Reports Analysis Centre of Canada at the Standing Senate Committee on Banking, Commerce and the Economy, Ottawa, Ontario, November 7, 2024

Check against delivery

Introduction

Thank you for the invitation to support your study. I am joined by Mr. Philippe Blanchette, Acting Deputy Director of Supervision and Chief Compliance Officer and Annette Ryan, Deputy Director of Partnership, Policy and Analysis.

I will briefly describe FINTRAC's mandate and provide some background on our supervisory model and operations. 

FINTRAC's supervision mandate

FINTRAC is one of 13 federal departments and agencies that play a key role in Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime, which is led by the Department of Finance Canada.

FINTRAC ensures the compliance of thousands of businesses that have obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, including to establish a compliance program, undertake know-your-client measures and due diligence, keep records and report certain types of financial transactions to FINTRAC.

We work with businesses across the country to ensure that they understand their obligations under the Act.

We also undertake hundreds of assessment activities every year, including examinations and other supervisory activities, to ensure businesses are fulfilling these requirements.

When we observe non-compliance, FINTRAC employs a range of enforcement measures, including administrative monetary penalties.

Under the Act, penalties are issued to encourage change in the non-compliant behaviour of businesses. The Act and associated Regulations establish penalty ranges for each violation, and penalties are calculated based on the nature of the violations.

Penalties are regularly complemented by FINTRAC's request for an action plan, with robust monitoring and reporting requirements, to address deficiencies.

I informed businesses last year that we were actively stepping up our enforcement action against businesses that were not fulfilling their responsibilities in relation to combatting money laundering and terrorist activity financing.

Since then, we have levied the four largest penalties in FINTRAC's history. In total last year, we issued 12 Notices of Violation in the amount of $26,115,999.

We also disclosed the largest number of cases of non-compliance to law enforcement for potential criminal investigation.

I was pleased to have the opportunity to meet the CEOs and Boards of Canada's largest financial institutions over the past year to discuss the multifaceted risks facing the industry and how we can work together to address them.

In these meetings, I was clear that compliance with the Act should never be viewed as a cost centre or an expense. Our collective efforts must not fall victim to economic challenges or downturns.

Money laundering is not a victimless crime. Proceeds of crime are generated through drug trafficking, fraud, human trafficking and online child sexual exploitation, among other terrible acts. Confronting these crimes, whether for private industry, government or law enforcement, is a moral and social imperative.

FINTRAC's financial intelligence mandate

Compliance with the Act ensures the Centre receives the information needed to produce financial intelligence for Canada's law enforcement and national security agencies.

In 2023–24, we generated more than 4,600 financial intelligence disclosure packages, based on 1,783 unique disclosures. These disclosures contained nearly a million financial transactions valued at close to $44 billion.

Our financial intelligence contributed to 266 significant, resource intensive investigations, last year and many hundreds of other individual investigations at the municipal, provincial and federal levels across the country, and internationally.

Conclusion

It takes a strong, equipped and committed network to defeat modern criminal and terrorist networks. FINTRAC is critical to Canada's ability to combat money laundering, terrorist financing and sanctions evasion – and to protecting Canada and Canadians.

Thank you. I am pleased to take any questions in support of your study.

Toronto Dominion Bank

Key messages and questions and answers – Imposition of an administrative monetary penalty on The Toronto-Dominion Bank (TD)

Key messages

Questions and answers

  1. Why did FINTRAC impose an administrative monetary penalty?

    FINTRAC imposed a penalty of $9,185,000 on The Toronto-Dominion Bank (TD), a bank in Toronto, Ontario, for non-compliance with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations in relation to its Canadian operations.

    The Toronto-Dominion Bank (TD) was found to have committed the following administrative violations:

    • 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;
    • Failure to assess and document money laundering/terrorist activity financing risks;
    • Failure to take the prescribed special measures for high risk;
    • Failure to conduct ongoing monitoring of business relationships; and
    • Failure to keep record of the measures taken and information obtained when conducting ongoing monitoring of business relationships.

    Under the Act, administrative monetary penalties are meant to be non-punitive and are issued to encourage change in the non-compliant behaviour of businesses.

  2. Why did FINTRAC not levy a larger penalty on TD?

    This is the largest administrative monetary penalty that FINTRAC has levied to date.

    Under the Act, which FINTRAC enforces, administrative monetary penalties are meant to be non-punitive and are issued to encourage change in the non-compliant behaviour of businesses.

    The Act and associated Regulations establish penalty ranges for each violation. Within these ranges, specific penalty amounts are calculated based on FINTRAC's Administrative Monetary Penalties policy. The policy outlines clearly and transparently the method used by FINTRAC to calculate penalties for non-compliance with the Act and associated Regulations.

    FINTRAC considers the following three criteria in determining a penalty amount:

    • the harm caused by the violation(s);
    • the compliance history of the reporting entity; and
    • the non-punitive nature of an administrative monetary penalty.

    More specifically, FINTRAC assesses harm in relation to the degree to which the violation obstructs Canada's ability to detect and deter money laundering and terrorist financing.

  3. Is this business being penalized for money laundering or terrorist activity financing?

    No. The violations are administrative in nature for not complying with requirements set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations. They are not for money laundering or terrorist financing offences.

  4. What is the status of this penalty?

    The administrative monetary penalty has been paid in full by TD and proceedings have ended.

  5. Can you provide any more information on this penalty?

    No. Pursuant to section 73.22 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC can only make public the name of the person or entity that committed the violation(s), which includes the business sector and the city where the business is located, the nature of the violation, and the penalty amount imposed.

  6. Why are you announcing this now?

    FINTRAC's Administrative Monetary Penalties policy clearly and transparently outlines the penalty process and the method of calculating penalties for non-compliance with the Act and associated Regulations.

    Businesses that receive a Notice of Violation (penalty) have 30 days to request a review of the penalty by the Director of FINTRAC. Following a request for a review, the Director has 90 days to render a decision. Businesses that do not agree with the Director's decision have 30 days to appeal that decision to the Federal Court.

    Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC is required to make public, as soon as feasible, the name of the business, the nature of the violation, and the amount of the penalty imposed in the following cases:

    • A business pays the penalty issued in a notice of violation.
    • A business neither pays the penalty issued in a notice of violation nor makes representations to FINTRAC's Director and Chief Executive Officer.
    • A business receives a notice of decision indicating that a violation has been committed.
    • A business enters into a compliance agreement with FINTRAC.
    • A business does not comply with a compliance agreement.

    Pursuant to section 73.22 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC can only make public the name of the person or entity that committed the violation(s), which includes the business sector and the city where the business is located, the nature of the violation, and the penalty amount imposed.

    Penalties imposed by FINTRAC are available on its public notice web page. The public notice of the penalty may occur months after the issuance of a Notice of Violation. Therefore, the fiscal year that an administrative monetary penalty is made public may not align with the fiscal year that the Notice of Violation is issued.

  7. Is there a non-compliance issue with Canadian banks?

    The banking sector plays a critical role in Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime. Financial institutions, including banks, provide the largest volume of reporting to FINTRAC and generally have a positive history of compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

    However, as the Director and CEO of FINTRAC has stated, the Centre is concerned about deficiencies related to the reporting of suspicious transactions and other threshold reporting, as well as foundational weaknesses in the governing frameworks of AML/ATF programs.

    FINTRAC has examined 150 financial entities over the past five years, including 33 banks. In total, the Centre has imposed administrative monetary penalties on 32 financial entities (including nine banks) since it received the legislative authority to do so in 2008.

  8. How is an administrative monetary penalty calculated?

    The Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations establish precise penalty ranges for each violation. Within these ranges, specific penalty amounts are calculated based on FINTRAC's Administrative Monetary Penalties policy. The policy outlines clearly and transparently the method used by FINTRAC to calculate penalties for non-compliance with the Act and associated Regulations.

    FINTRAC considers the following three criteria in determining a penalty amount:

    • the harm caused by the violation(s);
    • the compliance history of the reporting entity; and
    • the non-punitive nature of an administrative monetary penalty.

    More specifically, FINTRAC assesses harm in relation to the degree to which the violation obstructs Canada's ability to detect and deter money laundering and terrorist financing.

    FINTRAC developed and published a number of specific guides that describe its approach to assessing the harm done by the 200 violations prescribed in the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations (AMP Regulations), as well as FINTRAC's rationale in determining the corresponding penalty amounts.

  9. Are there criminal penalties in place for non-compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act?

    Yes. Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC may disclose cases of non-compliance to law enforcement when there are reasonable grounds to suspect that the information would be relevant to investigating or prosecuting an offence under the Act arising out of a contravention of Act. This generally involves instances in which the non-compliance is extensive or if there is little expectation of immediate or future compliance. FINTRAC disclosed 10 such cases in 2022–23.

    In this particular case, the violations are administrative in nature for not complying with the requirements set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated Regulations. They are not for money laundering or terrorist financing offences.

  10. How does FINTRAC ensure compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act?

    FINTRAC has a robust, risk-based approach in place to assist and ensure that businesses fulfill their requirements. FINTRAC has a number of different tools in place to verify the compliance of businesses across the country – the primary one being examinations.

    In recent years, FINTRAC has focused on more complex, lengthy and in-depth examinations of larger businesses in higher-risk sectors in order to determine how effectively they are fulfilling their compliance obligations. Information on FINTRAC's examination processes is available on its website.

    Of FINTRAC's 237 examinations over the past year, the largest number of examinations was focused on the money services business sector (88). This was followed by the real estate sector (71) and securities dealers (38).

General issues

Core responsibility: Supervision

Key messages

Background

FINTRAC is responsible for ensuring compliance with Part 1 and Part 1.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its associated Regulations. This legal framework establishes obligations for reporting entities to develop and implement a compliance program, which includes a risk assessment of all aspects of their business and clientele, and policies and procedures in order to identify clients, monitor business relationships, keep records and report certain types of financial transactions to FINTRAC.

FINTRAC undertakes enabling and enforcement actions to ensure that the reporting entities operating within Canada's financial system fulfill their PCMLTFA obligations. These obligations provide important measures for countering patterns and behaviours observed in criminals and terrorists in order to deter them from operating within the legitimate channels of Canada's economy. FINTRAC also maintains a registry of money services businesses in Canada and foreign money services businesses that direct and provide services to persons and entities in Canada.

Framework

FINTRAC's supervision framework is based on three complementary pillars: assistance, assessment and enforcement. Collectively, these pillars form a comprehensive, risk-based approach aimed at influencing behaviour whereby persons and entities subject to the PCMLTFA fulfill their obligations. Central to this are a host of activities aimed at ensuring that reporting entities understand and comply with their 'know-your-client' and record keeping requirements, and that they submit high quality and timely reports to FINTRAC.

Assistance

Promoting understanding and complying with the obligations through online publications, outreach, engagement and technical support.

Assessment

Desk or onsite examinations.

Monitoring reports submitted.

Observation letters to highlight improvements or gaps.

Compliance assessment reports to assess progress in implementing a compliance program.

Enforcement

Compliance meetings to identify and discuss non-compliance gaps

Findings letters

Action plans and follow-up examinations

Administrative monetary penalties

Non-compliance disclosures

FINTRAC provides ongoing guidance and support through conferences, working groups, training sessions, policy interpretations, as well as through collaboration with industry associations and other regulators. In particular, FINTRAC engages with sectors that are newly covered under the PCMLTFA obligations to ensure that the requirements are understood and being implemented appropriately. FINTRAC also experiments with new ways to provide strategic guidance to its reporting entities along with new online educational products, some of which will be targeted at specific reporting entity sectors.

Modernization

Innovation across the financial sector continues to challenge traditional regulatory models. In response, the Centre launched a multi-year supervision modernization initiative in 2019 called R.I.S.E. (Respond, Innovate, Strategize, Evolve) meant to ensure that FINTRAC's workforce is prepared and equipped for new ways of working that will allow it to keep pace with the innovative technologies that businesses are using and looking to implement. As part of this modernization initiative, FINTRAC is pursuing measures and activities that will equip the Centre and its people with more process automation, new digital tools and advanced data management solutions to keep up with the innovative technologies that reporting entities are using, supported by investments in recruitment, skills development and retention to ensure FINTRAC has the workforce it needs.

Administrative monetary penalties

The purpose of FINTRAC's Administrative monetary penalties (AMPs) program is to encourage future compliance with the Act and its regulations, and to promote a change in behaviour. The AMP program supports FINTRAC's mandate by providing a measured and proportionate response to particular instances of non-compliance. FINTRAC is committed to working with reporting entities (REs) to help them achieve compliance. AMPs are not issued automatically in response to non-compliance, as typically other compliance actions are taken to change behaviour before a penalty is considered.

In the normal course of our compliance activities, FINTRAC identifies instances of non-compliance with the Act and its regulations. The Centre assesses the severity of each non-compliance issue by understanding both the extent and the root cause of the non-compliance. Each non-compliance issue is assessed for its impact on FINTRAC's mandate and on the achievement of the objectives of the Act. To determine a suitable response to address a non-compliance result, FINTRAC will consider the result in a holistic context, including other factors such as the RE's compliance history.

FINTRAC may issue an AMP and serve a notice of violation when it has reasonable grounds to believe that an RE has violated a requirement of the Act and its regulations.

AMPs are not issued automatically in response to non-compliance. AMPs are one tool that is available to FINTRAC and are used to address repeated non-compliant behaviour. AMPs may also be used when there are significant issues of non-compliance or a high impact on FINTRAC's mandate or on the objectives of the Act and its regulations. An AMP is generally used when other compliance options have failed.

Categories of violations  
Minor violation $1 to $1,000 per violation
Serious violation $1 to $100,000 per violation
Very serious violation $1 to $100,000 per violation for an individual
$1 to $500,000 per violation for an entity

Core responsibility: Intelligence

Key messages

Background

FINTRAC is mandated by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to produce actionable financial intelligence that assists Canada's police, law enforcement, national security and other international and domestic partner agencies in combatting money laundering, terrorism financing and threats to the security of Canada, while protecting the personal information entrusted to FINTRAC. The Centre also produces strategic financial intelligence for federal policy and decision-makers, the security and intelligence community, reporting entities across the country, international partners and other stakeholders. FINTRAC's strategic intelligence provides a wide analytical perspective on the nature, scope and threat posed by money laundering and terrorism financing.

Given the complexity of connecting the flow of illicit funds often involving organized criminal groups, FINTRAC's financial intelligence very often contains hundreds or even thousands of financial transaction reports in each disclosure. A financial intelligence disclosure may show links between individuals and businesses that have not been identified in an investigation, and may help investigators refine the scope of their cases or shift their sights to different targets. A disclosure can pertain to an individual or a wider criminal network, and can also be used by law enforcement to put together affidavits to obtain search warrants and production orders. FINTRAC's financial intelligence is used in a wide variety of criminal investigations related to the funding of terrorist activities and the laundering of proceeds originating from such crimes as drug trafficking, fraud, tax evasion, corruption and human trafficking.

FINTRAC's financial intelligence can also be used to reinforce applications for the listing of terrorist entities and advance the government's knowledge of the financial dimensions of threats, including organized crime and terrorism.

FINTRAC's financial intelligence also plays a role in advancing and supporting innovative public-private sector partnerships. These partnerships are currently aimed at more effectively combatting money laundering in British Columbia and across Canada, human trafficking in the sex trade, romance fraud, the trafficking of illicit fentanyl, the laundering of proceeds of crime related to illicit cannabis, and child sexual abuse material on the Internet. By partnering with Canadian businesses, police and law enforcement agencies across Canada, FINTRAC has been effective in following the money to identify potential subjects, uncovering broader financial connections and providing intelligence to advance national project-level investigations.

In addition to the Centre's financial intelligence disclosures, FINTRAC also produces valuable strategic financial intelligence to fulfill its mandate. Strategic intelligence employs research and analytical techniques to identify emerging characteristics, trends and tactics used by criminals to launder money or fund terrorist activities. This analysis provides insight into the nature and extent of money laundering and terrorist activity financing in Canada and throughout the world. Among Canada's security and intelligence community, as well as regime partners and policy decision-makers, the Centre's strategic intelligence helps inform operational and policy decisions across the AML/ATF Regime by surfacing key trends and developments from a dynamic and evolving environment. For the businesses and individuals that make up the reporting entities in Canada's AML/ATF Regime, strategic intelligence is a key source of information guiding the measures they take to detect the presence of money laundering and terrorist activity financing. And strategic intelligence is the core method by which the Centre delivers on its objective to enhance public awareness and understanding of matters related to money laundering and the financing of terrorist activities.

Administrative monetary penalties

Issue

FINTRAC has issued multiple, large-scale AMPs in the last year, attracting significant media attention. In the case of large banks, it has also drawn comparisons to exams and penalties in foreign jurisdictions.

Key messages

Recent developments

Wealth One RBC CIBC TD Binance

Exam 2022

AMP Feb 2023

Exam started 2022

NOV issued Aug 2023

AMP imposed Nov 2023

Exam started 2021

AMP Oct 2023

Exam started 2023

NOV March 2024

AMP Apr 2024

Comp. activities in 2023

AMP May 2024
  1. Failure to develop and apply Ps&Ps for MDs, ongoing business relationships
  2. Failure to assess and document ML/TF risks
  3. Failure to institute and document review requirements for record keeping
  4. Failure to Report STRs
  1. Inconsistent interpretation and application of RGS; failed to report.
  2. Failure to provide prescribed information for STRs
  3. Failure to keep Ps& Ps up to date
  1. Failed to report STRs
  2. Failed to report EFTs
  1. Failed to report STRs
  2. Failure to assess and document ML/TF risks
  3. Failure to take special measures for high risk person or entity
  4. Failure to conduct ongoing monitoring
  5. Failure to keep records of measures and information obtained when conducting ongoing monitoring
  1. Failed to register as MSB
  2. Failed to report LVC transactions
Representations Made Representations Made   N/A N/A
$676,500, paid. $7,475,000, paid. $1,329,150, paid. $9,185,000.00, paid. $6,002,000

Background

AMPs are penalties, as opposed to criminal non-compliance, meant to be proportionate to the related administrative violations and an incentive to take corrective action without being punitive. Under the PCMLTFA, FINTRAC must choose to proceed with a penalty or refer the case to law enforcement to investigate criminal non-compliance.

Regulations categorize violations by degree of importance, and assign maximum penalty amounts between minor, serious and very serious violations, with a maximum of $500,000 per violation for an entity. FINTRAC further takes into consideration the harm done by the violation and the RE's history of compliance.

Questions and answers

How does FINTRAC ensure compliance with the Act?

How does FINTRAC select banks and other businesses for examinations and follow-up examinations?

Are banks generally compliant?

How is an administrative monetary penalty calculated?

Date Modified: