Canada

TECHNICAL COMPLIANCE ANNEX
Recommendation 35 – Sanctions
In its 2008 MER, Canada was rated PC because: administrative sanctions were not available to
FINTRAC; OFI used a limited range of sanctions; and effective sanctions had not been used in cases of
major deficiencies. Several changes occurred since then, e.g. FINTRAC was granted the power to
apply AMPs for non-compliance with the PCMLTFA.
Criterion 35.1— Civil and criminal sanctions are available in addition to remedial actions. FINTRAC
is responsible for imposing AMPs for non-compliance with the PCMLTFA and its regulations.
The PCMLTFA and related legislation provide for penalties for non-compliance with AML/CFT
measures. Part V of the PCMLTFA sets out penalties for non-compliance with the Act. The United
Nations Act provides that, when the United Nations Security Council passes a resolution imposing
sanctions, such measures automatically become part of domestic law, and sets out penalties for noncompliance
with its provisions.
Technical compliance Annex
The PCMLTFA covers a range of criminal offenses and a series of sanctions for contraventions of the
provisions of the Act. Criminal penalties for non-compliance can lead up to CAD 2 million in fines and
up to five years in prison. The criminal sanctions regime applies to most of the law and regulations
provisions in the PCMLTFA. LEAs can conduct investigations and lay criminal charges in cases of
non-compliance with the PCMLTFA.
The PCMLTF AMP Regulations govern the imposition of administrative sanctions for non-compliance
with the PCMLTFA and related regulations. They provide for penalties, classifying violations as
minor, serious or very serious. The maximum penalty for a violation by a person is set at
CAD 100 000 and for a RE it is CAD 500 000. The imposition of a penalty is on a per violation basis:
therefore, where there are multiple violations, an entity is potentially exposed to the maximum
penalty for each individual violation. The maximum AMP thresholds for serious violations raises
doubts whether it is proportionate or dissuasive (notwithstanding it relates to each instance of
violation), given that there may be circumstances where a single egregious breach (or a few) may
occur and the cumulative threshold might not be either a proportionate or dissuasive sanction. The
threshold may also not be dissuasive in circumstances of repeat offending.
There are also other non-monetary methods used by FINTRAC, in addition to the AMP procedure, to
apply corrective measures or sanction REs, including issuing deficiency letters, action plans for
FRFIs, compliance meetings and enquiries, public naming, revocation of registration of MSBs and
non-compliance case disclosures to LEAs.
OSFI has a range of powers as set out in OSFI Act, s.6. OSFI can apply written interventions, staging
(more intense/frequent supervision), put in place compliance agreements and directions of
compliance, place terms and conditions on a FRFI’s business operations and direct independent
auditors to extend the scope of their audit and guidance, which are enforceable. The staging process,
involving more intensive supervision of an FRFI, does have a dissuasive affect, as it attracts an
increase in the deposit insurance premiums paid by the FRFI concerned. OSFI can also remove
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Anti-money laundering and counter-terrorist financing measures in Canada - 2016 © FATF and APG 2016