FINTRAC Imposes App. $7.5 Million Penalty on Royal Bank of Canada for AML Compliance Breaches

December 6, 2023

FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) has imposed $7465,000 million penalty on the Royal Bank of Canada for non-compliance with anti-money laundering and counter-terrorist financing regulations, the largest penalty ever imposed by the agency.

FINTRAC electronically analyzes data from banks, insurance companies, businesses, and others to trace funds related to illicit activities.  RBC is accused of failing to file reports on suspicious transactions where there were valid reasons to suspect links to money laundering offenses, as per FINTRAC press release.

“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 offenses.”  Gillian McArdle, the spokesperson of the Royal Bank, remarked in a statement,  “Equally important, there is no finding that anyone exercised judgment in bad faith or knowingly contributed to violations.”
However, the penalty on RBS has been implemented based on the provision of the ‘Proceeds of Crime (Money Laundering) and Terrorist Financing Act’ and not due to criminal charges for money laundering or terrorist financing.

Compliance Investigation Findings in 2022

The agency issued the penalty on 03 November, after identifying violations during a compliance examination in 2022. Out of 130 case files under review, the Royal Bank failed to submit 16 suspicious transaction reports, even though there were solid grounds to suspect that transactions were associated with money laundering or terrorist financing.

Among these cases, the bank served with production orders on clients but didn’t escalate or refer the file to determine whether a suspicious transaction report should be submitted to FINTRAC. Despite the presence of indicators depicting sound reasons to suspect the offense,  transaction reports tied to fraud were not forwarded to FINTRAC. Additionally, the agency also identified deficiencies in the bank’s practices, including failure to provide information in the required format in suspicious transaction reports and lack of timely updates in written policies and procedures.

Apart from the Royal Bank of Canada, FINTRAC has enforced more than 125 penalties in various sectors with the authority granted over the past 15 years. During the financial year 2022-2023, FINTRAC issued six notices of non-compliance to businesses, with a total of $1,113,569 fines. There is a dire need for all sectors to show compliance with AML and CFT measures to detect and prevent illicit activities.

Also read: Why AML Ongoing Monitoring is Crucial for Your Business?