The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced that it has imposed an administrative monetary penalty on Exchange Bank of Canada in the amount of $2,457,750.

Following a compliance examination that took place between December 2022 and April 2024, the Toronto-based bank was charged with noncompliance with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated regulations.

Violations

Exchange Bank of Canada was found to have committed the following administrative violations:

• Failure to submit suspicious transaction reports (SARs) where there were reasonable grounds to suspect that transactions were related to a money laundering or terrorist activity financing offence;
• Failure to conduct ongoing monitoring of business relationships; and
• Failure to report the receipt from a person or entity of an amount of $10,000 or more in cash in a single transaction.

The Proceeds of Crime and Terrorist Financing Act applies to casinos, financial entities, money service businesses, real estate brokers and sales representatives and several other business sectors to require them to keep certain records, identify clients, maintain a compliance regime and report certain financial transactions to FINTRAC, including international electronic funds transfers, large cash transactions, large virtual currency transactions and suspicious transactions.

Enforcement of the money laundering law

Under this law and its respective regulations, the administrative monetary penalties issued by FINTRAC are meant to be non-punitive and the agency says “they are issued to encourage change in the noncompliant behavior of businesses.”

FINTRAC has stated that it has issued 12 notices of violation to businesses for a little over $26m. The agency has imposed more than 140 penalties across most business sectors since it received the legislative authority to do so in 2008.

In its annual report 2023-2024, FINRTAC said it used the information it received in the form of disclosures it got from Canadian firms to produce more than 4,600 financial intelligence disclosure packages, based on 1,783 unique disclosures, in support of investigations of money laundering, terrorist financing and threats to the security of Canada.