4. FINTRAC Exam Penalties

I’ve received a Notice of Penalty from FINTRAC.  Can I do something about this?

What went wrong with my FINTRAC Examination?

If you’ve received a Notice of Violation from FINTRAC (issued under section 73.13(2) of the Proceeds of Crime Money Laundering Terrorist Financing Act), this means that it has deemed the identified deficiencies to be violations and exercised its option to issue a Notice of Violation.

Understanding the Notice of Violation issued by FINTRAC

The Notice of Violation contains four sections.  On the first page, the Notice of Violation sets out the name of the offending entity along with the total administrative penalty being sought by FINTRAC.  The second section is called the List of Violations.  As its name implies, it is a list of the deficiencies upon which the monetary penalty is based.  Details of the alleged violations are not provided here.  The third section is “Appendix A”.  This section of the Notice sets out the details of the final penalty.  It sets out an initial maximum penalty, which is based on the nature of the violations, the total number of violations, the maximum penalty per each occurrence of that violation, and the total penalty per violation.  This initial maximum penalty may then be adjusted based on the following factors:  the impact of the non-compliance, the compliance history of the reporting entity, and the ability of the reporting entity to pay.  The fourth and final section is “Appendix B”, which again lists the alleged violations and provides details about how those violations are alleged to have been committed.

 What are your options if you’ve received a Notice of Violation from FINTRAC?

Once you’ve received a Notice of Violation, you have several options.  You can appeal to the Director.  This must be done in writing and done within 30 days of receiving the Notice of Violation.  You can appeal against both the alleged violations and the quantum of the fine.  If you choose to exercise this option, the monetary penalty does not need to be remitted at this stage.  If you lose this appeal there is a further right of appeal to the Federal Court of Canada, which you may choose to exercise.

Another option is to simply pay the penalty.  If you do this, you are deemed to have accepted both the violations and the penalty and have forgone your rights of appeal.  This is not an option that should be exercised lightly.

You could choose to ignore the Notice of Violation.  If you do nothing, after the expiration of 30 days from the date of receipt of the Notice, your entity will be deemed to have committed the violations and the full penalty plus interest will be payable.  This option is not recommended.

In some instances, FINTRAC will issue a Notice of Penalty with an offer to reduce the stated penalty by half if the reporting entity enters into a compliance agreement.  This is a way to reduce the penalty but entering into such an agreement may constitute acceptance of all the alleged violations.  An experienced professional should be consulted before exercising this option.

The potential consequences and why you shouldn’t just “pay the fine” issued by FINTRAC

Having a Notice of Violation issued against your organization can open the door to numerous consequences.  These include monetary penalties, publication of your organization’s name on the FINTRAC website as a violator, and a recommendation by FINTRAC that criminal charges be laid against your organization and/or individuals in your organization.  These penalties, in turn, may have a substantial negative impact on your organization’s business relationships and its ability to remain viable.

 How we can help you in your fight against FINTRAC

With a wealth of experience and expertise at our disposal, we can help by assessing your organization’s situation and providing advice and recommendations on how to deal with FINTRAC.  We can also advocate on behalf of your organization by corresponding and negotiating with FINTRAC and engaging the appeal process when it becomes necessary.

Contact Us