Questions arise over anti-money laundering agency’s decision not to name bank
A financial crimes expert says the federal anti-money-laundering agency breached its own standards by not identifying the Canadian bank it has fined $1.1 million for not reporting suspicious transactions — an assertion the watchdog denies.
On its website, the Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac, says it may name a person or entity that has been penalized if the violation is “very serious,” the penalty is at least $250,000 or it is a repeat occurrence.
“It breaches the director’s own standards on when a penalty should be published,” said Matthew McGuire, a financial crimes risk management expert at Toronto-based Securefact, said of Fintrac’s decision to withhold the bank’s identity.
“He published … a statement on Fintrac’s website that explains when they would and wouldn’t publish, and this certainly meets the criteria for being published.”
But Fintrac spokesman Darren Gibb said the policy also specifies that the agency has the authority to exercise discretion when it comes to naming companies.
“Fintrac’s public website makes it very clear that entities subject to an administrative monetary policy may be named,” said Gibb.
“In this particular case, we are exercising our discretion to withhold the name.”
Experts say that withholding the bank’s name may have been part of an agreement struck between Fintrac and the institution. In exchange for anonymity, the institution may have agreed to forgo a lengthy appeal process in the courts and pay the $1,154,670 fine, they say.
“I think that (Fintrac) probably wanted to have this information go out to send a message, and that that was considered more important than publicly naming this bank,” said Koker Christensen, a Toronto-based partner with Fasken Martineau who heads the law firm’s anti-money laundering counsel.
“Naming an institution obviously is a way of sanctioning or punishing that institution and also has some deterrence effect. … But I think that having a fine of this magnitude imposed on a bank and having that fact made public also has a deterrence effect.”
Gibb would not comment on whether such an agreement took place.
However, he did say that the federal agency wanted to send a clear message of deterrence as soon as possible by avoiding a drawn-out appeal process in the Federal Court of Canada.
“From our experience in other cases, the review and appeal period can take some time,” said Gibb.