For the second time this week, Canada’s financial intelligence agency announced a seven-figure penalty against a bank for alleged deficiencies regarding suspicious transaction reporting.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) said in a news release Thursday it fined the Canadian Imperial Bank of Commerce (CIBC) more than 1.3 million Canadian dollars (then-U.S. $950,000) on Oct. 23 for noncompliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The announcement follows a similar action FINTRAC disclosed Tuesday against Royal Bank of Canada, under which RBC was assessed a CAD$7.5 million (then-U.S. $5.5 million) penalty.
The details: Like RBC, CIBC was faulted for failing to submit suspicious transaction reports in cases where suspected money laundering offenses were considered reasonable.
FINTRAC cited one case in particular related to a client of the bank who had been arrested and charged with criminal offenses. The bank was aware of the charges and reviewed the client’s transactions but incorrectly determined a suspicious transaction report was not warranted.
The regulator also accused the bank of more than 1,000 instances where it failed to report the receipt of electronic funds transfers (EFT) from outside Canada as required. FINTRAC said a gap in the bank’s EFT reporting processes led to the lapses.
Compliance considerations: FINTRAC said it uncovered the alleged deficiencies at CIBC during a 2021 compliance examination.
Seven-figure fines are rare from FINTRAC, which entered this week having issued approximately CAD$1.2 million (U.S. $880,000) in total penalties across eight actions published online this year.
Bank response: “These administrative matters concerned the reporting of a relatively small number of transactions which we have since addressed and resolved,” said a CIBC spokesperson in an emailed statement. “We work closely to cooperate with regulators and law enforcement, as we did in this case, and continually invest in our monitoring and detection capabilities amid an evolving landscape. We take our responsibilities seriously and will continue to identify, investigate, and do our part to deter and detect financial crimes.”