Recently, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced the introduction of a set of tools (the Tools) aimed at supporting Canadian reporting entities (REs), including financial institutions, in meeting their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act). The Tools include FINTRAC’s compliance framework, FINTRAC’s assessment manual, the administrative money penalties (AMP) policy, the penalty sample calculation, and the voluntary self-declaration of non-compliance notice.
An explanation of the utility of each Tool is set out below:
- FINTRAC’s compliance framework
The compliance framework provides a high-level overview of FINTRAC’s regulatory operations, including its guiding principles, the key obligations imposed on businesses, and the processes FINTRAC will follow in the course of providing assistance, assessing compliance or undertaking enforcement actions. Those who are unfamiliar with FINTRAC’s mandate and powers should consult this resource to orient themselves.
- FINTRAC’s assessment manual
The manual sets out FINTRAC’s approach to compliance investigations. It helps REs understand how FINTRAC makes a determination as to whether a compliance program meets the legal requirements of the Act, and sets out what to expect from an examination. The manual will be useful for those who have received notice of an impending FINTRAC examination.
- Revised AMP policy
FINTRAC has the authority to issue a revised AMP policy when it has reasonable grounds to believe that a reporting entity has violated a requirement of the Act. This policy statement provides guidance on the AMP regime. Among other things, the policy statement sets out the purpose of FINTRAC’s fines, categories of violations, the criteria used to determine the AMP amount and details of the right to appeal the AMP. REs that have received a notice of violation from FINTRAC or have been fined should review this document to ensure they are familiar with the grounds and procedure underlying the penalty.
- Penalty sample calculation
To provide further clarity with respect to its AMP program, FINTRAC has provided an annotated example of how fines are calculated. This example supports the AMP policy statement (#3 above) and could provide valuable insight for those seeking to understand the regulatory risk stemming from the Act.
- Voluntary self-declaration of non-compliance notice
FINTRAC has noted that “the ultimate goal of the regulatory regime is to enhance compliance, not to impose penalties.” To support this principle, FINTRAC provides REs with the option to self-report incidents of non-compliance with the Act. REs that pursue this option can, in certain circumstances, avoid an AMP. The policy statement sets out the requirements for self-reporting.
Thanks to Eric Vice, articling student, for his contribution to this article.