Fintrac flags major gaps as bank misses suspicious transaction reports in high-risk cases
A federal investigation has found that the First Nations Bank of Canada failed to submit suspicious transaction reports in nearly a third of reviewed cases where there were reasonable grounds to suspect money laundering or terrorist financing offences.
CBC News reports that FINTRAC, Canada’s financial intelligence agency, imposed a $601,139.80 penalty on the Saskatoon-based bank for five violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The violations relate to oversight of suspicious transactions, assessments of high-risk clients, and reporting requirements.
According to FINTRAC’s violation summary, “First Nations Bank of Canada failed to submit suspicious transaction reports in 31 percent of the case files reviewed by FINTRAC, where there were reasonable grounds to suspect that one or more transactions were related to the commission or attempted commission of a money laundering or terrorist activity financing offence.”
The agency’s investigation, covering transactions from January 1, 2023, to December 31, 2023, revealed gaps in the bank’s policies and procedures for monitoring and reporting suspicious transactions and high-risk clients.
According to FINTRAC’s release, the five administrative violations included:
- Failure to submit suspicious transaction reports where there were reasonable grounds to suspect that transactions were related to the commission or attempted commission of a money laundering or a terrorist activity financing offence.
- Failure to develop and apply written compliance policies and procedures that are kept up to date, and, in the case of an entity, are approved by a senior officer.
- Failure to assess and document the risk of a money laundering or terrorist financing offence.
- Failure of a person or entity to take prescribed special measures.
- Failure to conduct ongoing monitoring of business relationships.
In response, the First Nations Bank of Canada stated it has paid the fine and accepted FINTRAC’s recommendations for improving internal policies and procedures.
The bank said it has since brought in compliance experts, reworked its internal monitoring, and hired a new chief compliance and anti-money laundering officer.
“The [First Nations Bank of Canada] takes all regulatory feedback seriously and is committed to the highest compliance standard,” the statement said.
FINTRAC requires financial institutions, casinos, and real estate brokers to keep records, identify clients, and report suspicious financial transactions.
The agency uses this information to assist law enforcement and security agencies in investigating money laundering, terrorist financing, and threats to Canada’s security.
“We consider an administrative monetary penalty to be effective when the penalty amount is proportional to the harm done and prompts a change in behaviour toward future compliance,” according to FINTRAC’s website.
