FINTRAC fines Exchange Bank of Canada USD 2.46 million for AML oversight

The decision to fine Exchange Bank of Canada follows FINTRAC’s findings regarding the financial institution’s failure to submit suspicious transaction reports despite having reasonable grounds to do so, as well as for inadequately conducting ongoing monitoring of business relationships, and not reporting USD 10,000 or more in cash in a single transaction.

To further scale financial security, FINTRAC recently partnered with three US federal banking agencies, including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board. The collaborative agreement intended to augment cooperation in monitoring and ensuring compliance with Anti-Money Laundering (AML) and Anti-Terrorist Financing (ATF) regulations for banks involved in cross-border operations.

Exchange Bank of Canada’s faulty AML procedures

FINTRAC conducted a review of Exchange Bank of Canada’s procedures between the end of 2022 and April 2024, discovering that the financial institution’s programme did not present sufficient advancement, thus not reaching an acceptable level of maturity. Representatives from FINTRAC commented on the decision, mentioning that the organisation aims to be firm in ensuring businesses continue to contribute in complying with regulatory requirements under the process of crime and terrorist financing act. Moreover, the regulator underlined that Exchange Bank of Canada filed a notice of appeal on the decision. However, at the time of writing, no additional details were provided either by FINTRAC or by the bank.

The penalty imposed on Exchange Bank of Canada follows FINTRAC’s USD 7.4 million fine on Canada TD Bank from February 2024. After an examination conducted by the regulator, the institution’s AML controls were found insufficient. At that time, TD Bank underlined its commitment to prioritising augmenting its AML programme, appointing new executives and advisors with larger expertise to direct these efforts, process redesign, and training.