Thursday, April 7, 2016

What Are They Hiding?

You tell me.
The federal agency that levied a $1.1-million fine against a Canadian bank for failing to report a suspicious transaction had intended the hefty penalty to send a stern message to the financial sector. Instead, it has fuelled an outcry over why the name of the penalized bank has been kept a secret.

On Wednesday, all of the Big Six Canadian banks said they were not fined by Financial Transactions and Reports Analysis Centre of Canada, or FinTRAC, leading to speculation that the offending bank is a smaller entity or the Canadian branch of a foreign institution.

FinTRAC said that the fine, the first of its kind levied against a Canadian bank and paid two weeks ago, was supposed to act as a deterrent against taking a loose approach to reporting standards. Rules have been toughened up in recent years in response to money laundering and terrorism financing activities.

But it is unclear how this deterrent is supposed to work when the offender is granted anonymity and whether an unintended consequence of the fine is that it casts suspicions upon the entire financial sector.
While FinTrac has been happy in the past to name names, its reluctance to identify a big player is perhaps best explained this way:
Michael Baumbach is director of Toronto-based Diamond Exchange Toronto Inc. which was fined $12,750 and named by Fintrac in March. He says the agency is unfairly punishing smaller firms like his jewelry business, which is trying hard to comply, while letting bigger players with deeper pockets off the hook.

He believes the bank’s name was kept secret because it has resources at its disposal to give Fintrac a legal headache. Meanwhile, he feels powerless when trying to get answers about why it fined his company, which now faces bankruptcy over what he says is an unjust fine.

“The banks are not just going to sit back and have their names slipped, but a small company — we can’t do anything,” he said.

“All they’re doing is putting the smaller businesses out of business and the bigger businesses who have the legal clout to contest it, obviously they’re not naming names because of the fact that these companies will do something.”
Yet another reminder that the thing we call justice can too frequently be a fluid and elusive concept, more honoured in the breach than in the observance.

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