In my blog post of April 14th, I discussed what I
referred to as the curious case of the penalty that Financial
Transactions and Reports Analysis Centre of Canada (FINTRAC) had
imposed on a bank. On April 17th, FINTRAC called with
some information relevant to both the contents of my post and of
some of the press reports that had addressed the case. As I
found the information to be informative, I thought that I would
pass it along.
One of the aspects of the penalty that the post discussed was
FINTRAC's decision not to publish the name of the entity, in
this case a bank, on which the penalty had been imposed. I
noted that FINTRAC published on its website, a cumulative list of
the penalties that have been imposed that, in each case, includes
the name of the entity that paid the fine. I also suggested
that the words used to describe the list seemed to suggest that it
is exhaustive of all prior cases since 2009.
FINTRAC told me that there have been 34 additional cases where
penalties have been imposed where FINTRAC decided not to publish
the name of the entity involved or the facts of the case. My
conversation with the FINTRAC official was friendly and at no time
did FINTRAC suggest or recommend that I write a follow-up post.
So, what follows is my own assessment of this information and
how it impacts my original post.
As FINTRAC did not disclose to me any of the facts of the bank
case, it is not possible to reach any conclusion about whether it
was more like the cases where FINTRAC did name the entity or more
like those in which it did not. What we do know is that more
often than not, FINTRAC elects not to name the entity.
Therefore, contrary to some press reports, there is no reason to
believe that the bank received more favourable treatment just
because it is a bank. In fact, it received the same treatment
that a majority of the other entities that paid fines in the
As I reported in my previous post, FINTRAC does publish
information about the criteria it uses to decide whether or not to
publish a particular case. However, the criteria are
principles-based and subjective. Without knowing more about
the cases it did not publish, it is not possible to comment on the
fairness of FINTRAC's decisions. However, without going
too far out on a limb, it is likely appropriate to conclude that it
did not base its decision in this case on the simple fact that a
bank was involved. At the same time, as the amount of
the fine imposed is almost three times the amount of the next
highest penalty in the cases that have been disclosed, it would
have been interesting to know the facts involved. For
example, when compliance officers risk rate applicable regulatory
requirements, one factor that is normally considered is the size of
penalties that have been imposed in respect of the requirement.
While we know the size of the fine paid, we do not know the
breaches to which the penalty relates.
I do wish to thank FINTRAC for the call. Helping its
constituents, including mere lawyers in private practice, to better
understand its practices is certainly helpful.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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