A federal regulator responsible for combating money laundering and terrorist financing has flagged concerns over inconsistent reporting of suspicious transactions by Canadian banks.
Blacklock's Reporter says the Financial Transactions and Reports Analysis Centre (FINTRAC) cited "foundational weaknesses" in compliance efforts across the sector.
"Are Canadian banks failing to comply?" questioned a November 7 memo.
"Banks play a crucial role in Canada’s anti-money laundering and anti-terrorist financing system. While financial institutions, including banks, contribute the most reports to FINTRAC and generally maintain a history of compliance, gaps remain."
The memo, included in the Director’s Binder, outlined concerns about deficiencies in reporting suspicious transactions and other mandatory disclosures. FINTRAC reviewed 150 financial institutions over the past five years, including 33 banks, and imposed administrative penalties on 32 financial entities, nine of which were banks.
"Money laundering is not a victimless crime," the memo stated. "Criminal proceeds stem from drug trafficking, fraud, human trafficking, and online child exploitation, among other heinous activities. Addressing these crimes is a moral and social obligation for private industry, government, and law enforcement."
In 2023, FINTRAC issued 12 fines totaling $26.1 million for violations of the Proceeds of Crime and Terrorist Financing Act, which mandates the reporting of all cash transactions exceeding $10,000. The largest fine was issued to Toronto-Dominion Bank on April 9, amounting to $9.2 million for five violations of the Act. Other penalties included:
Royal Bank: $7.5 million (2023)
Exchange Bank: $2.5 million (December 11, 2023)
Canadian Imperial Bank of Commerce: $1.3 million (2023)
Manulife Bank: $1.15 million (2016)
Industrial and Commercial Bank of China: $701,250 (2021)
Wealth One Bank: $676,500 (2023)
Laurentian Bank: $486,750 (2022)
FINTRAC, which employs 468 staff and costs $78.8 million annually, has proposed that financial institutions cover enforcement costs. A 2024 Regulatory Impact Analysis Statement described this as "a long-term funding solution" that would allow the Centre to recover compliance program expenses from the entities it oversees.
