FINTRAC Fines Marouf Management Inc. for Lapses in Anti-Money Laundering Practices

Key Takeaways

• FINTRAC’s Penalty: Marouf Management Inc. was fined $249,480.50 after failing to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
• Violations: The company failed to implement critical anti-money laundering measures, including proper compliance policies, risk assessments, and registration as a money services business.
• Purpose of Penalties: FINTRAC’s administrative penalties are designed to ensure businesses adhere to regulations and contribute to the security of Canada’s financial system.
• Ongoing Enforcement: In 2023–24, FINTRAC issued Notices of Violation to 12 businesses, totaling over $26 million in fines, reinforcing the importance of compliance.

Deep Dive

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has imposed an administrative monetary penalty of $249,480.50 on Marouf Management Inc. This penalty, issued on November 4, 2024, follows a compliance examination carried out in 2023, which uncovered significant failures in Marouf’s anti-money laundering (AML) practices.

Marouf Management Inc., also doing business as Marouf Currency Exchange and 1998063 Ontario Inc., was found to have violated several key provisions under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). The business was flagged for failing to implement basic compliance measures, such as keeping up-to-date written policies and procedures, conducting adequate risk assessments for money laundering or terrorist financing activities, and even neglecting to properly register as a money services business (MSB).

The violations paint a concerning picture of neglect in an area critical to protecting Canada’s economy and national security. Among the specific failures were:

• A lack of written compliance policies and procedures.
• No documented risk assessment for money laundering or terrorist financing.
• Non-compliance with a ministerial directive.
• Failure to keep the required financial records.
• Issues with the business registration process, including missing notifications of changes.

Sarah Paquet, FINTRAC’s Director and CEO, commented on the violation, emphasizing that the purpose of these regulations is to protect Canadians and their financial system from the dangers posed by money laundering and terrorist financing.

“The Regime is in place to protect the safety of Canadians and the security of Canada’s economy,” said Paquet. “We work closely with businesses to help them comply, but when compliance falls short, we take the necessary actions.”

FINTRAC’s firm stance on non-compliance is aimed at sending a clear message to businesses about their responsibility in safeguarding the financial landscape. By imposing penalties, FINTRAC is also motivating businesses to re-evaluate their practices and strengthen their commitment to regulatory obligations.

FINTRAC’s Role in Ensuring Compliance
As Canada’s financial intelligence unit, FINTRAC serves as both a monitor and an enforcer of the country’s anti-money laundering laws. In addition to penalizing non-compliant businesses like Marouf Management Inc., FINTRAC helps guide industries, from casinos to financial institutions, to understand their obligations and improve compliance. By providing clear frameworks and guidance, FINTRAC plays a pivotal role in ensuring that businesses are not only meeting regulatory requirements but are actively contributing to a system that helps prevent criminal activities such as money laundering and terrorist financing.

Marouf Management Inc.’s fine is part of FINTRAC’s larger effort to ensure adherence to AML regulations across Canada. In 2023–24, the Centre issued Notices of Violation to 12 businesses, amounting to over $26 million in penalties.

Suspicious transaction reports, in particular, remain a key tool for FINTRAC. The agency depends on businesses to flag potentially illicit activities, which in turn help law enforcement and national security agencies identify and investigate threats to Canada’s security.

While the fine against Marouf Management Inc. reflects the seriousness with which FINTRAC enforces these regulations, it also serves as an opportunity for the business to reassess and strengthen its compliance practices. As Canada continues to face evolving financial risks, it is crucial that businesses, big and small, recognize their role in protecting the integrity of the nation’s economy.

FINTRAC’s penalty is a step in the right direction, but the real work begins when businesses like Marouf take responsibility, improve their systems, and ensure they are fully compliant with the anti-money laundering and terrorist financing measures set out by the Canadian government.

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