Canada’s anti-money laundering agency on Tuesday said it had imposed a C$7.5 million ($5.52 million) fine on Royal Bank of Canada (RY.TO) for failure to submit suspicious transaction reports, a first of its kind for Canada’s biggest bank.
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) said the administrative monetary penalty was imposed on Nov 3 following a compliance examination in 2022.
“We chose not to appeal but believe the fine is not at all commensurate with an administrative matter where there is no connection to money laundering or terrorist financing offences,” RBC said.
“Equally important, there is no finding that anyone exercised judgment in bad faith or knowingly contributed to violations.”
The penalty, a rarity among Canadian banks, comes after the country’s second biggest bank TD TD.TO this year said it was being investigated by the U.S. Justice Department for anti-money-laundering compliance south of the border.
TD said it has been responding to formal and informal inquiries from regulators and law enforcement concerning its AML compliance program, that could result in monetary or non-monetary penalties. The probe began after TD called off its $13.4-billion acquisition of U.S. lender First Horizon in May.
In Canada, FINTRAC has increased AML vigilance more recently.
“What we’re seeing is, FINTRAC is taking a different approach and they have in the past… I don’t think there are going to be any more free passes,” said Garry Clement, financial crime prevention expert and CEO of Clement Advisory Group.
FINTRAC said it found that RBC was not filing separate suspicious transaction reports for different branch locations prior to May 2021 and lacked appropriate and documented governance for implementing AML procedures.
RBC failed to submit 16 suspicious transaction reports out of 130 case files reviewed, the agency said.
RBC’s penalty was imposed under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and not for criminal offences for money laundering or terrorist activity financing.
Source: Reuters
