Canada’s anti-money-laundering and anti-terrorist-financing regulator – FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) has imposed a C$7.5m ($5.5m) monetary penalty on the Royal Bank of Canada (RBC) for failure to submit suspicious transaction reports.

FINTRAC said the fine was imposed on November 3, 2023 following a compliance examination in 2022. RBC was found to have not been in compliance with with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated Regulations (the AML/ATF Regulations). The regulator identified RBC as having committed the following three administrative violations:

• Failure to submit 16 suspicious transaction reports (out of 130 case files reviewed) where there were reasonable grounds to suspect that transactions were related to a money laundering offence. Instances included failure to escalate referrals where there were indicators to support escalation, and where investigations were closed without adequate reviews.
• Failure to provide information in the prescribed form and manner in suspicious transactions reports.
• Failure to keep written policies and procedures up to date. FINTRAC determined that the Bank lacked appropriate and documented governance for developing, updating, and effectively implementing AML/ATF policies and procedures.

FINTRAC said this penalty was imposed for administrative violations committed by RBC under the AML Regulations, and not for criminal offences for money laundering or terrorist activity financing. It also said that administrative monetary penalties are non-punitive and are issued to encourage change in the non-compliant behavior of businesses.

Bank denies AML connection

RBC has stated it will not appeal FINTRAC’s charges.

In a statement to CBC News, the bank said: “We chose not to appeal but believe the fine is not at all commensurate with an administrative matter where there is no connection to money laundering or terrorist financing offences.”

“Equally important, there is no finding that anyone exercised judgment in bad faith or knowingly contributed to violations.”

Sarah Paquet, Director and Chief Executive Officer at FINTRAC, said: “Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime is in place to protect the safety of Canadians and the security of Canada’s economy.

“FINTRAC will continue to work with businesses to help them understand and comply with their obligations under the Act. We will also be firm in ensuring that businesses continue to do their part and we will take appropriate actions when they are needed.”