The British Columbia Lottery Corp. (BCLC) has been hit with a $1-million penalty for alleged anti-money laundering failures by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
The federal anti-money laundering agency imposed an administrative monetary penalty of $1,075,000 on the BCLC — which oversees legal gambling, lotteries, and casinos in the province — after finding compliance violations, including that it failed to report suspicious transactions, failed to develop and apply policies and procedures for high-risk clients, and failed to pay special attention to risky clients.
The BCLC said that it is appealing the regulator’s decision to the Federal Court.
In a statement, the BCLC said that it “takes its responsibilities under Canadian anti-money laundering legislation very seriously. It is confident in its position that it has fully complied with all its legal and regulatory obligations.”
The BCLC reported that after it received a compliance notice from FINTRAC, it thoroughly reviewed the agency’s findings and “provided FINTRAC with information counter to its conclusions.” However, FINTRAC upheld its initial decision, it said.
The agency said that the alleged violations were found during a compliance exam.
According to FINTRAC, the most serious violation was the BCLC’s alleged failure to submit suspicious transaction reports when there were “reasonable grounds to suspect that transactions were related to a money laundering or terrorist activity financing offence.”
A further examination also “revealed gaps in the organization’s enhanced due diligence review process,” it said, adding that it failed to consider certain red flags in its review of the high-risk patron whose activity should have resulted in suspicious transaction reports.
Additionally, FINTRAC found that the organization failed to adopt enhanced monitoring measures for a risky client, “which led to gaps in the timely review of transactions to detect suspicious transactions.”
The agency also found that the BCLC failed to document how it differentiated between high- and low-risk clients, and didn’t apply enhanced due diligence to risky clients.
“Specifically, due to the patron’s rate of play and the volume of funds, along with other factors, [BCLC] should have identified the patron as high-risk and should have applied prescribed special measures, which if conducted, would have assisted the organization in analyzing, identifying and reporting suspicious transaction reports in a timely manner,” it said.