RBC Slapped with $7.4M Penalty by Fintrac Over Anti-Money Laundering Non-Compliance

Canada's financial intelligence agency, the Financial Transactions and Reports Analysis Centre of Canada (Fintrac), has levied a substantial $7.4 million penalty against the Royal Bank of Canada (RBC) for its non-compliance with anti-money laundering (AML) and terrorist financing measures.

Fintrac's findings reveal multiple violations, including the failure to submit suspicious transaction reports when there were reasonable grounds to suspect connections to money laundering offenses. Out of 130 case files reviewed, RBC neglected to submit 16 suspicious transaction reports, leading to the hefty penalty.

The administrative penalty, imposed on November 3, follows a compliance examination conducted by Fintrac in 2022. Despite the severity of the penalty, RBC has chosen not to appeal. In a statement to CBC News, the bank expressed its disagreement with the magnitude of the fine, emphasizing that the matter lacked any connection to money laundering or terrorist financing offenses. RBC further clarified that there was no finding of bad faith or knowing contributions to the violations.

It is crucial to note that the penalty imposed on RBC falls under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and does not pertain to criminal offenses related to money laundering or terrorist activity financing.

Fintrac's role involves identifying funds associated with illicit activities by meticulously analyzing millions of pieces of information annually from various entities, including banks, insurance companies, and money services businesses. The agency then shares intelligence about suspected cases with law enforcement agencies.

Sarah Paquet, the director of Fintrac, emphasized in a recent speech that the agency's priority is to collaborate with businesses to ensure compliance with reporting obligations. However, Paquet also highlighted instances where some entities were lagging in compliance, indicating that Fintrac would take appropriate action as needed.

This penalty against RBC is notable, especially considering that Canadian banks rarely face such substantial fines. The move by Fintrac to increase anti-money laundering vigilance aligns with a broader trend in regulatory enforcement. Garry Clement, a financial crime prevention expert and CEO of Clement Advisory Group, commented on the shift, noting that Fintrac appears to be adopting a more assertive approach, signaling the end of leniency in compliance matters.

This development comes on the heels of another major Canadian bank, Toronto Dominion (TD), revealing that it is under investigation by the U.S. Justice Department for anti-money laundering compliance issues south of the border. These recent actions underscore the increasing scrutiny and accountability faced by financial institutions in the realm of anti-money laundering efforts.

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