Summary: Montecristo Jewellers Inc. (MJI) appealed against a decision by the Director of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), which found MJI guilty of four violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and imposed a total administrative monetary penalty of $222,750.

Key Points:

• Violations and Penalties: The Director confirmed MJI committed four specific violations during a compliance period from October 2018 to March 2019. These included failure to report suspicious transactions, inadequate compliance policies and procedures, insufficient risk assessment documentation, and ineffective ongoing compliance training for employees.
• Previous Compliance Issues: MJI had been examined by FINTRAC in 2013 and 2015 and found in violation then, but no penalties were imposed at those times.
• Legal Proceedings: The appeal focused on whether MJI met its obligations under the Act regarding suspicious transaction reporting and compliance measures, with particular challenges to the administrative penalties applied.

Outcome: The Federal Court dismissed MJI's appeal regarding three of the four violations but allowed the appeal regarding the fourth violation related to the effectiveness of the compliance training. The decision emphasized the role of procedural fairness and the appropriateness of penalties in ensuring compliance without being punitive.