Tuesday, December 27, 2016

A Special Understanding

Under successive neoliberal administrations in both Canada and the U.S., it has long been demonstrated that those occupying the upper echelons of our fractured societies are granted a myriad of benefits, not the least of which seems to be a virtual moratorium on prosecutions when wrongdoing is uncovered and proven. The fact that no one went to jail over the 2008 financial meltdown is but the most egregious example. Indeed, such is their power and arrogance that corporate executives were given bonuses from the very bail-out money that taxpayers funded for those institutions and enterprises deemed "too big to fail." When there is punishment of any kind for malfeasance, it is usually just fines which the errant entity can then use as tax write-offs.

Although the strongest examples of special treatment can be found stateside, Canada has its own way of dealing with financial malfeasance that should anger all of us, reflective as it is of the neoliberalism that pervades our land.

Thanks to a joint investigation by The Toronto Star and The National Obsserver {a fine online newspaper that offers subscriptions and solicits donations to support its journalism), we have yet another example in the deeply offensive special treatment by Fintrac, Canada’s money laundering and terrorist financing enforcement agency, of a major Canadian bank.
Canada’s money-laundering agency is refusing to name the bank hit with an unprecedented penalty for failing to report a suspicious transaction and committing hundreds of other violations in its dealings with a controversial client. Details of the failures — including one the agency described as “very serious”...

For nearly two years, the bank failed to report a series of unusual transactions in its client’s account, despite news reports at the time revealing he was under criminal investigation in the U.S. The transactions included dozens of large cash deposits and hundreds of international transfers worth more than $12 million, reveal the newly-released documents.
Despite the fact that the law requires reporting of transaction amounting to 10,000 or more, from
early 2012 to the end of 2013, the unnamed bank processed 1,179 international electronic transfers of $10,000 or more from the mystery client, who used a “potential shell company” and operated out of an unnamed country associated with money laundering. It also accepted 45 cash deposits of $10,000 or more, all without ever reporting the transactions to Fintrac, Canada’s money laundering and terrorist financing enforcement agency, as required by law.
With some deductive sleuthing, the newspapers were able to determine that the individual involved in these transactions was
Manitoba online pharmacy entrepreneur Andrew Strempler, 42, who pleaded guilty to mail fraud charges in the U.S. after his shipments were found to contain counterfeit medication.
While Strembler served his time and was released in October of 2015, Fintrac has treated the bank, which, under existing law, it could name, to anonymity after levying a $1.15 million fine, certainly a modest penalty given what the law allows:
Anyone who knowingly fails to report a suspicious transaction to FINTRAC can face a $2 million fine and up to five years in prison, under Canadian legislation on money laundering and terrorism financing. The maximum administrative monetary penalty for the bank's hundreds of violations would have been $1.8 million, the documents said.
The original penalty was $1.5 million, but Fintrac reduced it after 'negotiating' with the bank, which argued that the harm done was minimal.

I beg to differ with its decision to protect a major bank's reputation. Flagrantly violating the law 1,225 times in this case is damaging both to confidence in our banking system annd deeply demoralizing to the average person's sense of fair play. As Christine Duhaime, a lawyer who specializes in anti-moneylaundering law says,
“Joe Average who is fined for any administrative infraction is not afforded secrecy in this way and the rules should apply to all Canadians, legal and natural personals, equally, from banks to Joe Average.”
Yet Fintrac somehow seems to feel that they have really brought down the hammer in this case:
Fintrac said Tuesday’s announcement is meant to deter others from failing to report.

But the bank’s name was not added to a list of violators published on the agency’s website. The home page shows the name of many smaller companies, such as jewelry stores, independent securities dealers and real estate brokerages.
Quite unapologetic, Fintrac, according to The Observer report, feels it has done exemplary work in this case:
FINTRAC said it was trying to be discreet.

“The process has concluded and FINTRAC exercised its discretion not to name the entity so that we could send a timely message of deterrence to the 31,000 businesses that are subject to the Proceeds of Crime, Money Laundering and Terrorism Financing Act”.
I'm afraid that the only message Fintrac has managed to convey is confirmation that there is indeed one law for the 'giants' who walk among us, and quite another for the rest of us. It is far past time that this special understanding (wink, wink, nudge, nudge) between certain societal segments and the massive insult to the rest of us ended.


  1. Hi Lorne The fear of costumers leaving a bank identified to have broken the law would provide a power incentive to stay within the bounds of legality which of course is why we aren't permitted to know this bank's identity

    1. Hi Kev. Hope you are enjoying the Christmas season. I found it strange that Fintrac seems to think that by denying us the name of the bank, the other financial institutions will feel duly deterred. Clearly, they have a different understanding of psychology than you and me.

  2. A really interesting read Lorne and Happy New Year by the way. When our very own government and public institutions are also involved in the corrupt neoliberal agenda, then secrecy will always trump transparency and justice.

    The arrogance shown to Canadians by not revealing the banks name,I find the most offensive.

    I expect though that we will see more of this secrecy in 2017.

    1. Happy New Year, Pamela. The reason I support papers such as The Star and The Observer is that they do the heavy lifting to keep society informed; the rest is up to us. If enough Canadians find such secrecy odious and outrageous, there is a glimmer of hope that it will end. Potent and righteous anger still have a place in our times.

  3. I was thinking about this problem today as I recalled the KPMG/Isle of Man tax cheat scandal. That went public in March and it sent Trudeau scurrying to vow that the miscreants would be quickly dealt with. Then, like the Panama Papers, it was flushed down the Memory Hole with nary a peep out of the Dauphin. I wonder what to make of that?

    1. Given the CRA's past special treatment for big offenders, Mound, I expect we will just see more of the same.

  4. We're fools if we believe the virus stops at our borders, Lorne.

    1. Like many viruses, Owen, this one seems especially virulent.