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Canada’s anti-money laundering agency disclosed a record $7.5 million administrative penalty against Royal Bank of Canada on Tuesday in an indication that regulators are taking a firmer stance against financial crime-related compliance lapses.

In a statement, the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, which doubles as the country’s financial intelligence unit, noted that RBC, the nation’s largest lender, failed to flag suspicious activity, neglected to keep its written AML policies and procedures up to date and did not disclose relevant information in suspicious transaction reports during an unspecified period.

Tuesday’s penalty dwarfs Fintrac’s previous record administrative penalty for violations of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act, a $1.2 million fine against Manulife Bank of Canada in April 2016.

Fintrac’s enforcement notice also details RBC’s failings, discovered in a 2022 examination, with unprecedented specificity, Matt McGuire, practice leader at The AML Shop, a consultancy in Toronto, told ACAMS moneylaundering.com.

“Naming and shaming is becoming more serious,” McGuire said. “They’re getting more specific and pointed about what went on—that’s trying to send a message to the rest of the industry.”

Toronto-headquartered RBC failed to submit 16 suspicious transactions reports, or STRs, across 130 customer files selected for review by regulators during the examination, Fintrac said, including in several instances where the bank received a judicial production order concerning a client but conducted no further investigation to determine whether filing an STR was warranted.

The bank also failed to correctly report branch locations as required in 29 of 34 STRs examined by regulators, a practice that it corrected in May 2021. Finally, RBC compliance officers lacked clear instructions for when and how they should flag customers subject to judicial production orders internally for further scrutiny, among other procedural and record-keeping deficiencies.

“I think they’re trying to say: ‘Look, you need to at least take care of the low-hanging fruit,'” McGuire told moneylaundering.com.

RBC said in an emailed statement that it had chosen not to appeal the penalty, which Fintrac levied on Nov. 3 and still represents still only a fraction of the almost $15 billion the bank reported in annual net income for the financial year ending on Oct. 31.

But RBC also noted that the fine was a disproportionate way of settling an “administrative matter where there was no connection to money laundering or terrorist financing offences,” and pointed out that regulators had not accused the bank of bad faith or deliberate violations on the part of any of its employees.

Tuesday’s enforcement action makes good on warnings senior Canadian officials issued last month at The Assembly Canada conference hosted by ACAMS in Toronto, where Fintrac director Sarah Paquet said that her agency would be “stepping up” enforcement, while Nathalie Martineau, regional director of its Toronto office, said regulators would soon begin publicizing the specifics of institutions’ compliance failures.

During its most recent fiscal year ending in March, Fintrac levied AML-related penalties against four money services business and two other firms worth a total $1.1 million. Since then, the agency has fined three real estate firms, two jewelers and an MSB a combined $470,000, followed by the blockbuster penalty against RBC.

Contact Fred Williams at fwilliams@acams.org