A view of the Parliament buildings in Ottawa, where the Financial Transactions and Reports Analysis Centre is based.Adrian Wyld/The Canadian Press
Canada’s financial crime watchdog is penalizing a bank, a real estate brokerage and a precious metals and stones dealer for alleged failures in their financial crime controls.
The Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) levied the fines against VersaBank VBNK-T, RE/MAX Twin City Realty Inc. and Birks Group Inc. BGI-A during a time of heightened focus on financial crime by the federal government, which is creating a new federal law enforcement agency to tackle the problem.
FinTRAC has been stepping up its enforcement activities involving non-compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The watchdog issued 23 penalties in its most recent fiscal year – the largest number in its history – totalling $25-million.
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FinTRAC fined London, Ont.-based VersaBank $42,075 for two violations of the act. The watchdog said the bank failed to develop and apply written compliance policies and procedures that are kept up to date and approved by a senior officer, and to take special measures for high-risk clients. VersaBank has already paid the penalty.
Twin City Realty, a Kitchener, Ont.-based real estate brokerage, has paid FinTRAC $24,750 for allegedly failing to assess and document the risk of a money-laundering or terrorist-financing offence.
Meanwhile, Birks, a precious metals and stones dealer with locations across Canada, has appealed a $51,562.50 penalty levied against it in March.
FinTRAC alleges that Birks failed to develop and apply written compliance policies and procedures, to assess and document the risk of a money-laundering or terrorist-financing offence and to carry out and document the results of a biennial audit.
Among FinTRAC’s findings was that the company’s policies and procedures allegedly failed to include requirements to verify the existence of corporations, obtain beneficial ownership information, conduct ongoing monitoring, keep records on politically exposed persons and heads of international organizations or comply with ministerial directives.
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Canada’s anti-money-laundering regime requires entities such as financial institutions, real estate and mortgage brokers, casinos and cryptocurrency exchanges to report certain types of transactions to FinTRAC, and to have policies in place to prevent and detect financial crime. In total, more than 38,000 businesses are subject to the act.
Sarah Paquet, FinTRAC’s director and chief executive officer, said the watchdog works with businesses to help them understand and comply with their legal obligations around anti-money laundering and anti-terrorist financing.
“We are also firm in ensuring that businesses continue to do their part and we will take appropriate actions when they are needed,” Ms. Paquet said in a statement.
Experts have lauded Ottawa for introducing legislation last month to establish the long-awaited Financial Crimes Agency, fulfilling a 2021 Liberal campaign promise.
Canada has historically had low prosecution rates when it comes to financial crimes, and the new federal police force demonstrates that the country is getting serious about addressing the issue, Léon Moubayed, a partner at Davies Ward Phillips & Vineberg LLP, previously told The Globe and Mail.
Ottawa has earmarked $352.7-million over five years to launch the new agency, and $82.1-million annually after that.
The federal government has also recently completed consultations for a national anti-fraud strategy.