When reviewing suspicious transactions, FINTRAC may disclose non-compliance to law enforcement when it suspects on reasonable grounds that the information would be relevant to investigating or prosecuting non-compliance offences (i.e., criminal charges) under the Act, OR it may choose to follow a civil process, and issue a Notice of Violation, with an administrative monetary penalty (“AMP”) attached.

Who is Registered for FINTRAC?

In operationalizing its powers under the Act, FINTRAC registers businesses in certain sectors for participation in enhanced client identification, reporting, and record-keeping procedures.  These business areas include, but are not limited to financial entities (banks, credit unions, etc.), accountants, casinos, dealers in precious metals and stones, “money services businesses” (foreign currency exchanges, etc.), real estate brokers/agents and developers, life insurance, and mortgage brokers and lenders, among others.

Entities listed in s.5 must be registered, and follow the prescribed reporting requirements under the Act – including the obligation to report every financial transaction relating to the offences of money laundering or terrorist activity financing, per s.7.  Thus, even entities that are unregistered may be held to FINTRAC’s reporting requirements if they fall within s.5.  Failure to comply with any obligations under the Act may result in hefty non-compliance consequences, where criminal charges or AMPs may be issued.

What happens when there is a violation?

AMPs issued by FINTRAC can be classified as a “minor” (i.e., up to $1,000 per violation), “serious” (i.e. up to $100,000 per violation), or a “very serious” violation (i.e. up to $100,000 per violation for an individual, and up to $500,000 per violation for another entity (e.g., a corporation).  In deciding appropriate penalty amounts, FINTRAC will consider: (1) the purpose of the AMPS (i.e., to encourage compliance, rather than punish); (2) the harm done by the violation; and (3) the RE’s compliance history.  

Notably, where a violation is found and penalty imposed, FINTRAC will also publicly disclose the names of persons and entities on  their website for 5 years.

Appeal Procedures

Persons on the receiving end of FINTRAC AMPs can contest them - although there are notoriously tight time-frames for doing so (e.g., 30 days or less), and specialized legal assistance in this area is advisable.

Takeaways

When caught up with FINTRAC reviews or FINTRAC AMPs, seek specialized legal assistance.

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