Investment dealer Canaccord Genuity Corp. is being sanctioned by federal authorities for violations of anti-money laundering rules — including overlooking clients’ potential red flags.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) hit the firm with a $544,500 penalty after a compliance review in 2023 uncovered several breaches, including a failure to report suspicious transactions.
According to the agency’s enforcement notice, the firm failed to “submit three suspicious transaction reports out of 100 case files where there were reasonable grounds to suspect” the transactions involved illegal activity.
“FINTRAC’s examination revealed gaps in the organization’s due diligence review process, and identified a number of indicators, such as open-source references, that were not considered during Canaccord Genuity Corp.’s review of its high-risk clients,” it noted.
Among other things, FINTRAC said the firm missed risky client red flags, such as a client using multiple foreign bank accounts “for no apparent reason,” apparently unrelated clients sharing an address and “the presence of information that is misleading and vague.”
The firm also overlooked relevant media reports about clients, the agency said.
“[Canaccord] discounted crucial money laundering and terrorist activity financing indicators in the course of its periodic reviews, such as relevant negative media articles,” it said. It added that the firm “failed to conduct an adequate review and assessment of the client’s transactions,” despite the reporting that pointed to these kinds of risks.
Ultimately, FINTRAC found the firm’s transaction and due diligence review “to be ineffective” in helping it uncover suspicious transactions.
Alongside this “very serious” violation, the agency also found other weaknesses in its written compliance policies and procedures, its risk assessment methodology, and its failure to consistently apply enhanced due diligence on all high-risk clients, such as keeping beneficial ownership and know-your-client information up to date.
FINTRAC noted that the penalty has been paid.