Feds look to boost anti-money laundering oversight penalties by 40 times

OTTAWA — Ottawa plans to boost penalties for anti-money-laundering oversight failures by 40 times as part of several measures it wants to roll out to crack down on the issue.

The proposal, outlined in the fall economic statement Monday, would see the maximum administrative penalty against banks and others rise to either $20 million per violation, or three per cent of annual worldwide gross revenue if that’s higher.

The government said recent trends have reinforced the importance making sure companies follow anti-money laundering and terrorist financing laws, and not treat penalties for non-compliance as the cost of doing business.

It says the new reforms will ensure non-compliance is treated as a serious priority.

The plans also include increase fines for criminal offences by 10 times and to provide more guidance on jail terms.

The move to boost fines come as money laundering has seen increased attention in recent years, including from the Panama Papers, money laundering issues at B.C. casinos and the revelation earlier this year that criminals in the U.S. used TD Bank to launder more than $969 million in illicit drug profits.

U.S. regulators forced TD to pay $4.42 billion for its oversight failures, thanks in part to laws that allow them to charge US$500,000 per day to a bank that isn’t compliant with the rules.

In Canada currently, Fintrac can issue a total maximum of $500,000 for each “very serious” reporting violation. The limited fines available meant that Fintrac’s $9.2-million penalty imposed on TD earlier this year was its largest ever.

To put in rough perspective, a 40-fold increase in that penalty would work out to $368 million.

Along with increased fines, plans also include developing a new task force for law enforcement and the financial sector to share and analyze information related to “high-end” money laundering schemes, including related to fentanyl trafficking.

The government also plans to allow Fintrac to share information with election oversight officials to deter and detect illicit financing and foreign interference in Canadian elections.

This report by The Canadian Press was first published Dec. 17, 2024.

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The Canadian Press