FINTRAC Hits Exchange Bank of Canada With $2.45 Million Penalty for AML Failures

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has slapped Toronto-based Exchange Bank of Canada with a $2,457,750 penalty for failing to uphold key anti-money laundering (AML) and anti-terrorist financing rules.

The fine, announced this week, stems from a lengthy compliance examination conducted between December 2022 and April 2024. FINTRAC’s findings revealed troubling gaps in the bank’s adherence to Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), leading to the hefty penalty issued on November 5, 2024.

Exchange Bank of Canada’s violations weren’t minor slip-ups; they hit at the core of what FINTRAC calls the backbone of the country’s AML regime. The agency flagged three critical failings:

1. Suspicious Transactions Went Unreported: Despite reasonable grounds to suspect some transactions were linked to money laundering or terrorist financing, the bank failed to file suspicious transaction reports (STRs).
2. Neglected Monitoring of Relationships: Ongoing monitoring of business relationships—a fundamental part of any compliance program—was noticeably absent.
3. Big Cash Transactions Went Under the Radar: Transactions involving $10,000 or more in cash weren’t reported as required, leaving a glaring compliance gap.

A Message From FINTRAC

Sarah Paquet, FINTRAC’s Director and Chief Executive Officer, didn’t mince words about the importance of compliance in keeping Canada’s financial system secure.

“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,” Paquet said. “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.”

This penalty isn’t just about money; it’s a public reminder of the critical role financial institutions play in fighting financial crimes. Suspicious transaction reporting, for example, feeds FINTRAC’s ability to generate actionable intelligence for law enforcement and national security agencies. When institutions fail to submit these reports, it doesn’t just breach regulations—it hampers efforts to track and prevent money laundering, terrorist financing, and sanctions evasion.

FINTRAC’s Growing Enforcement Muscle

Exchange Bank of Canada isn’t alone in feeling the weight of FINTRAC’s scrutiny. In the 2023–24 fiscal year alone, the agency issued 12 Notices of Violation totaling over $26 million in penalties. Since gaining authority to issue penalties in 2008, FINTRAC has imposed more than 140 penalties across sectors like casinos, financial entities, and real estate.

For businesses, this enforcement activity underscores the high stakes of non-compliance. Record-keeping, client identification, ongoing monitoring, and reporting large transactions—be they in cash or virtual currency—aren’t just box-ticking exercises. They’re non-negotiable elements of Canada’s fight against financial crime.

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