With FINTRAC issuing its first administrative monetary penalty (AMP) against a bank this year, in excess of $1 million, and an increase in AMP activity generally, managing litigation and penalty risk is becoming an increasingly important aspect of compliance programs for all reporting entities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Careful consideration should be given to how unusual transactions are identified, communicated about and reviewed for reporting purposes. Internal communications about unusual transactions and related indicators of money laundering, in particular, premature expressions of opinions and conclusions about suspicions of money laundering prior to completion of a review by AML specialists, may give rise to an enhanced compliance risk; in particular a greater risk of issuance of AMPs in the course of a FINTRAC examination.
Today, FINTRAC issued its "Operational Brief: Indicators of Money Laundering in Financial Transactions Related to Real Estate." The target audience for the brief includes bankers and credit unions, in addition to real estate brokers and developers.
Financial institutions should ensure their front line staff is aware of the guidance, and that the commentary on these indicators is incorporated into their compliance regimes, if they are not already adequately addressed. With substantial media coverage on money laundering issues in the real estate sector, this guidance is likely an indicator that FINTRAC will be placing enhanced focus on real estate transactions in the coming years.