Canada’s AML agency fines RBC $5.5M over suspicious transaction reports

The penalty was imposed Nov. 3 but announced by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) on Tuesday. The agency said it found evidence of noncompliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act at RBC following an examination in 2022.

The details: FINTRAC alleged three specific violations at RBC:

1. Failure to submit suspicious transaction reports in cases where suspected money laundering offenses were considered reasonable. This impacted 16 out of 130 case files reviewed and included instances related to fraud and failures in the bank’s escalation and investigation procedures.
2. Failure to provide required information in suspicious transaction reports, including filing separate reports for different branch locations. FINTRAC said its review found 29 of 34 reports that included transactions for multiple locations.
3. Failure to keep written policies and procedures up to date. FINTRAC said some of RBC’s procedures for reporting suspicious transactions were “incomplete, inadequate, and in some cases not applicable.”

The agency noted its penalty was not in response to any criminal offenses for money laundering or terrorist activity financing.

Compliance considerations: The penalty amount is notable considering FINTRAC issued approximately CAD$1.2 million (U.S. $880,000) in fines across eight other actions published online this year.

Bank response: “We hold ourselves to the highest standards on our processes to report suspicious activity and quickly took action to address gaps,” said RBC in an emailed statement. “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.

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