Ensuring Compliance in Light of FINTRAC’s 2024 Administrative Monetary Penalties
In 2024, FINTRAC Canada imposed significant administrative monetary penalties (AMPs) across various industries for non-compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). The total fines exceeded $18 million, underscoring the importance of robust compliance programs. For businesses subject to AML obligations, these penalties highlight critical areas of concern and potential risk.
At Platino Consulting, we specialize in supporting businesses to ensure compliance with FINTRAC Canada’s regulations. By understanding the recurring deficiencies, we offer customized solutions that mitigate risks, protect businesses, and help avoid the reputational and financial consequences of non-compliance.
Summary of FINTRAC’s 2024 Administrative Monetary Penalties
Nature of Violations
Businesses penalized by FINTRAC in 2024 committed a variety of violations under the PCMLTFA and its associated regulations. Here are some of the most common violations observed:
Failure to Submit Suspicious Transaction Reports (STRs):
Numerous entities failed to identify and report transactions suspected to be linked to money laundering or terrorist financing.
Non-Compliance with Ministerial Directives:
Organizations failed to treat transactions involving specific high-risk jurisdictions as high-risk and did not meet the enhanced due diligence (EDD) requirements under ministerial directives.
Inadequate Compliance Policies and Procedures:
Many businesses lacked sufficient or up-to-date AML compliance frameworks tailored to their operations, leaving them vulnerable to violations.
Risk Assessment Deficiencies:
Businesses were found to have incomplete or nonexistent assessments of the money laundering (ML) and terrorist financing (TF) risks associated with their clients and transactions.
Lapses in Record-Keeping:
Inadequate documentation of client identification, transactions, and records of business relationships were recurring issues.
Failures in Staff Training and Independent Reviews:
Many organizations did not maintain robust training programs or conduct prescribed independent reviews to test the effectiveness of their compliance programs.
Breakdown of Industries Fined
Money Services Businesses (MSBs):
MSBs faced the highest penalties, primarily for failing to report large cash transactions or international electronic funds transfers and for gaps in risk assessments and compliance frameworks.
Deficiencies included inadequate client identification measures, insufficient record-keeping, and failure to conduct ongoing monitoring of business relationships.
Banks and Financial Institutions:
These entities were penalized for failing to submit STRs, maintain effective transaction monitoring systems, and conduct due diligence on high-risk clients.
Dealers in Precious Metals and Stones (DPMS):
Violations centered on inadequate policies for reporting large transactions and failure to comply with ministerial directives.
Wealth Management Firms and Securities Dealers:
These organizations were fined for failing to assess risks associated with new technologies and geographic locations, as well as for incomplete compliance frameworks.
Total Fines Issued in 2024
The total penalties issued by FINTRAC Canada in 2024 surpassed $18 million, with individual fines ranging from $49,500 to $9,185,000. These penalties emphasize FINTRAC’s commitment to enforcing AML and counter-terrorist financing (CTF) regulations.
Most Common Deficiency: Reporting Failures
Reporting deficiencies, particularly the failure to file Suspicious Transaction Reports (STRs), emerged as the most significant issue. In several cases, businesses failed to recognize or act on obvious ML/TF red flags, resulting in unreported transactions. This failure represents a severe compliance gap and contributes to intelligence blind spots in Canada’s AML regime.
As a leading compliance consultant, Platino Consulting provides end-to-end AML solutions to help businesses comply with FINTRAC Canada’s requirements under the PCMLTFA. Here’s how we can mitigate the risks highlighted by 2024’s penalties:
1. Strengthening AML Compliance Programs
We design and implement comprehensive AML compliance frameworks tailored to your business model and operations. Our services include:
Developing written policies and procedures that reflect current regulations.
Establishing effective transaction monitoring systems.
Conducting regular updates to ensure the program evolves with regulatory changes.
2. Enhancing Risk Assessments
We help businesses assess and document risks associated with:
High-risk clients and jurisdictions.
Emerging technologies and new delivery channels.
Evolving ML/TF typologies.
Our risk-based approach ensures that businesses prioritize mitigation measures where they are most needed.
3. Improving Reporting Processes
Our team provides:
Training to ensure staff can recognize and report suspicious transactions.
Support in creating efficient reporting workflows for large cash and electronic funds transfers.
Reviews of past transactions to identify unreported red flags and address systemic gaps.
4. Ensuring Compliance with Ministerial Directives
We assist businesses in meeting the enhanced due diligence requirements for high-risk jurisdictions. Our services include:
Implementing controls to monitor transactions linked to countries subject to ministerial directives.
Documenting compliance measures to demonstrate adherence to FINTRAC Canada’s requirements.
5. Conducting Independent Reviews and Staff Training
Our team conducts in-depth audits to assess the effectiveness of compliance programs. Additionally, we offer training programs to ensure staff at all levels are equipped to meet AML obligations.
6. Record-Keeping and Documentation
We help businesses establish robust record-keeping practices, ensuring all required information is properly documented and retained.
Avoiding the Pitfalls of Non-Compliance
Non-compliance with FINTRAC Canada’s regulations can result in severe financial penalties and reputational harm. By partnering with Platino Consulting, businesses can proactively address compliance gaps and reduce their exposure to risk by:
Implementing automated transaction monitoring systems tuned to detect ML/TF risks.
Conducting independent reviews to identify gaps in STR reporting.
Providing enhanced training to staff on identifying high-risk transactions.
The penalties issued by FINTRAC in 2024 underscore the importance of robust AML compliance. As regulatory scrutiny increases, businesses must remain vigilant and proactive.
Platino Consulting is here to help businesses navigate the complexities of AML Canada regulations. Whether you need assistance with compliance program development, risk assessments, or reporting obligations, our team of AML consultants has the expertise to keep your business compliant and protected.
Contact Platino Consulting today to learn how we can support your AML compliance journey.
