The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the federal agency responsible for the detection, prevention and deterrence of money laundering and terrorist financing, has, for the first time, imposed an administrative monetary penalty on a Canadian bank. The penalty of more than $1.1-million comes at a time of increased scrutiny of Canadian financial institutions and financial transactional crime as a result of the publication of the Panama Papers.
The enforcement efforts of the Ontario Securities Commission (OSC), the regulator that administers and enforces compliance with the provisions of the Securities Act (Ontario) and the Commodity Futures Act (Ontario), have had mixed success— at best. With a mandate to protect investors and ensure fair and efficient capital markets through monitoring compliance and enforcement measures in the securities industry in Ontario, the regulatory body has been struggling to be taken seriously. Having taken a chapter from the playbook of the American national Securities Exchange Commission (SEC), prosecuting individuals for Insider trading, tipping, and securities fraud, the initial results, which are highlighted below, were underwhelming. Now, in a renewed effort to assert its presence in the capital markets as a regulator with teeth, the OSC is taking new approaches, with more promising results.
Recent trends have seen legislative penalties increase, prosecutors cracking down, and more individuals going to jail. We have entered a new era of white collar crime enforcement in Canada.
In mid-2013, the Corruption Foreign Public Officials Act (CFPOA) was amended by the Federal Government. It introduced a “new books and records” offence, increased the maximum jail time to 14 years for individuals, and promised to phase out the legality of facilitation payments. The Royal Canadian Mounted Police (RCMP) was assigned the exclusive jurisdiction over investigation and laying charges under the CFPOA and given an enhanced increase in their mandate to investigate and prosecute more corporations and individuals, which it is doing.
Following this, the RCMP prosecuted Nazir Karigar, a Canadian-Indian business man, under the CFPOA. At his lengthy trial it was never proven that he gave a bribe to an Air India (foreign) official, as alleged; the Crown did prove, to the court’s satisfaction, that he intended to pay a bribe to secure business with Air India for an American company. That was enough to convict and send him inside for 3 years.
There were three FCPA enforcement actions brought or announced in August 2015.
BNY Mellon became the first – of what is expected to be several financial services companies – to pay millions ($14.8 million to be precise) in an SEC enforcement action based on its alleged internship practices. This flagged various issues to consider from the enforcement action including that it was the first SEC FCPA enforcement ever not to include allegations or findings of books and records violations. This recent BNY Mellon enforcement action highlight why the meaning of “foreign official” matters.