Anti-money laundering agency imposes biggest fine yet on RBC

Fintrac says Canada’s largest bank failed to report suspicious transactions

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Royal Bank of Canada has been ordered to pay a nearly $7.5-million penalty for administrative violations under the Proceeds of Crime (Money Laundering) and Terrorist Finance Act and associated regulations.

In a notice published on its website Dec. 5, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) said, among other things, RBC failed to submit 16 suspicious transaction reports where there were reasonable grounds to suspect that transactions were related to the commission or attempted commission of a money laundering or terrorist activity financing offence.

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The $7,475,000 fine against RBC is the largest ever imposed by the agency, reports the Canadian Press.

The anti-money laundering agency found three types of infractions involving the 16 cases in a 2022 compliance review of 130 case files.

In addition to taking issue with RBC’s reporting of suspicious transactions, the review also found shortcomings in the bank’s methods for developing, updating and implementing policies and procedures to guard against money laundering and terrorist financing.

“This penalty was imposed for administrative violations committed by RBC … and not for criminal offences for money laundering or terrorist activity financing,” FINTRAC said on its website in reference to the penalty that was imposed Nov. 3.

A spokesperson for RBC said the bank holds itself to the highest standards on processes to report suspicious transactions and quickly took action to address gaps.

“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,” Ingrid Mone, senior manager of the corporate communications, legal affairs and compliance group at RBC, said in an emailed statement on Dec. 5.

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“Equally important, there is no finding that anyone exercised judgment in bad faith or knowingly contributed to violations.”

According to the FINTRAC report, among the suspicious transaction reports that RBC failed to submit were instances related to fraud where reports were not sent to FINTRAC despite the presence of indicators that established reasonable grounds to suspect the transactions were related to the commission or attempted commission of a money laundering or terrorist financing offence or a TF offence.

There were also instances where case investigations were closed citing that no FINTRAC report was required without adequate review of the client activity, and instances where the bank was served with production orders on clients and failed to escalate or refer the files to determine whether a report should be submitted to FINTRAC.

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The compliance review also found that, prior to May 2021, the bank was not submitting separate reports for suspicious transactions at different branch locations when multiple locations were involved, as required.

“In addition, several procedures related to the identification and reporting of STRs (suspicious transaction reports) were found to be incomplete, inadequate, and in some cases not applicable,” FINTRAC said.

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