- FINTRAC wants to conduct an examination of our organization. What should we do?
Prepare! FINTRAC typically does not provide extensions. And with the exception of residential houses, they have broad powers to obtain information relevant to assessing your compliance with the legislation. This is not the time to stick your head in the sand. We typically recommend assembling the requested documentation, and conducting an internal review, preferably with the assistance of a compliance consultant, to self-identify weaknesses, and to develop a strategy for remediation.
- FINTRAC has asked my organization to forward a list of documents. Do we have to? What if we don’t even have some of the requested items?
FINTRAC has clear and sweeping powers to obtain documents from reporting entities to assess their compliance with the legislation (certainly not privileged documents though). If you fail to send them the requested documents within 30 days of the request, serious penalties and criminal charges can apply. And you can be found deficient for the compliance obligations to which those documents relate. If you don’t have the documentation they’re asking for, it’s best to talk to the FEDs to develop an approach.
- FINTRAC sent us a letter claiming that we have numerous deficiencies. Some of them we agree with but others we don’t. How should we respond?
It depends on how serious the allegations are. It may be worth initiating discussions with FINTRAC towards a compliance agreement. Otherwise, those disagreements should be communicated in writing, with appropriate support and reasoning, in your action plan. It’s often helpful to get an informed outside view about the apparent validity of the cited deficiencies.
- Just how big are the penalties that FINTRAC can issue?
For violations that are deemed to be minor, the maximum penalty is $1,000 per violation. For violations that are deemed to be serious, the maximum penalty is $100,000 per violation. For violations that are deemed to be very serious, the maximum penalty is $500,000 per violation. These are the maximum penalties per violation type. The total penalty can grow quickly with no ceiling based on the total number of violations.
- What if we don’t pay the FINTRAC penalty? What if we don’t pay it within 30 days?
If payment of the penalty or a written appeal to the Director is not made within 30 days after the receipt of the Notice of Violation is received, the violations will be deemed to have been committed and payment of the full amount of the penalty will be required. In other words, you will be presumed to be guilty and have forgone your rights of appeal.
- FINTRAC has issued a penalty against us. Should we just pay it and get them off our back?
This may seem like the quickest and easiest solution. However, there may be consequences beyond the monetary penalty itself that you are unaware of that may be irreversible and fatal to your organization. It is best to seek the advice of a qualified professional before proceeding with such a final step.
- My organization is low risk. We don’t see any terrorists or organized criminals in this neck of the woods. Do we really need to comply?
Conveying this sentiment to FINTRAC will almost certainly land you a penalty. Compliance is not optional, regardless of the assessed risk of your organization.
- Do we need a lawyer?
When FINTRAC turns its focus to your organization, your organization is being investigated much like a suspect in a criminal case is investigated by the police. The stakes are significant and it is imperative that your organization understands its legal rights and obligations during this confrontation with FINTRAC. Obtaining legal advice and, perhaps, representation could mean the difference between survival and extinction for your organization.
- We want to co-operate with FINTRAC. If we hire you won’t that upset FINTRAC and make us look like we’re hiding something?
Like the Canada Revenue Agency, FINTRAC has significant enforcement powers and is not your friend. Hiring a compliance consultant in fact serves to demonstrate your commitment to compliance. And having legal representation is your right.