20/12/2024 - Validient's Weekly Roundup

This week’s anti-money laundering (AML) headlines highlight significant enforcement actions, both foreign and domestic with the SRA issuing its highest fine on a law firm amid a crackdown on AML breaches, while Canada’s FINTRAC fined Exchange Bank $2.46M for compliance failures. New Canadian AML rules are set to propose a 40x penalty increase, signalling tougher measures ahead.

SRA Fines handed out Highest fine

The Solicitors Regulation Authority (SRA) has imposed its highest fine to date, ￡24,540, on Freedman + Hilmi for AML breaches, specifically the absence of client and matter risk assessments. This is part of a broader enforcement effort resulting in fines to 14 firms for AML non-compliance, including failures to maintain firm-wide risk assessments and adequate policies. The penalties highlight inconsistencies in fine calculations among different adjudicators.

Fine issued to Exchange Bank of Canada

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has fined the Exchange Bank of Canada USD 2.46 million for failing to submit suspicious transaction reports, inadequate monitoring of business relationships, and not reporting large cash transactions. This action follows a review of the bank's procedures between late 2022 and April 2024, indicating insufficient advancement in compliance programs. The bank has filed a notice of appeal against the decision.

Canada proposals to increase AML fines by 40x

Canada is set to enhance its AML framework by proposing legislative changes that increase penalties up to 40 times. Companies could face fines up to $20 million per violation, and individuals up to $4 million. The amendments also introduce criminal charges for entities providing false information. These measures aim to strengthen the FINTRAC enforcement powers ahead of the Financial Action Task Force's 2025-2026 evaluation.

Solicitors over-reliant on COLPs according to review

The SRA has expressed concern that solicitors are overly reliant on their firms' compliance officers for legal practice (COLPs) and only check their professional obligations when issues arise. Research indicates solicitors may overestimate their regulatory knowledge, with few engaging with SRA resources. The SRA emphasises that maintaining professional obligations is an individual responsibility that cannot be delegated.

New Sanctions issued to Georgian officials

The UK government has sanctioned five senior Georgian officials, including the Minister and Deputy Minister of Internal Affairs, for their roles in violent crackdowns on journalists and peaceful protesters. These sanctions, coordinated with the United States, involve travel bans and asset freezes. The UK's actions follow Georgia's suspension of its move towards European integration and aim to hold accountable those undermining democracy and human rights.

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