Canada's banking regulator to increase focus on ML issues

At the beginning of December 2023, the Financial Transactions and Reports Analysis Centre (FINTRACT) imposed a fine on both the Royal Bank of Canada (RBC) and the Canadian Imperial Bank of Commerce (CIBC) for a total of approximately USD 6.68 million, for failing to submit suspicious transaction reports. The regulator intends to work more closely with FINTRAC on evidence of significant money laundering issues at an institution, with plans for additional supervising. Furthermore, even if the OSFI does not directly manage the US operations of Canadian banks, the regulator collaborates with the Office of the Comptroller of the Currency (OCC) and other authorities when issues within the local subsidiaries are identified. Representatives from OSFI stated that the regulatory body aims to include oversight of non-financial risks such as cybersecurity, money laundering, and terrorist financing, as geopolitical tensions increase. Also, it intends to investigate issues of foreign interference and national security difficulties at large banks. After receiving new capabilities relating to national security, FINTRAC focuses on increasing its monitoring of suspicious transactions by modernising its systems and technologies. The supplementary resources focus on supporting the agency to work in real-time and mitigate money laundering and terrorist financing risks.

In addition to the current announcement made by OSFI, Canada’s anti-money laundering agency underscored  its plans to increase its usage of AI to detect suspicious transactions at the beginning of January 2024. At that time, FINTRAC intended to leverage the new technology to search for suspicious transactions, as well as to partner with financial institutions to decrease risks. According to FINTRAC data, approximately 75% of all suspicious transactions between April and September 2023 were reported by financial institutions.

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