Executive Summary: Key Legal and Evidentiary Issues

• FINTRAC found total non-compliance with anti-money laundering requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

• Austin Jewellers failed to produce a written compliance program and risk assessment despite being a regulated reporting entity.

• The Director imposed two administrative monetary penalties totaling $66,000 based on Level 1 harm under FINTRAC’s guidelines.

• Appellant argued penalties were punitive and disproportionate to its size, income, and circumstances.

• Court rejected claims that less severe measures (e.g., compliance agreement) were improperly overlooked.

• Federal Court upheld the Director’s decision and awarded $2,000 in costs against the appellant.

Facts and outcome of the case

Austin Jewellers, a small jewellery business operating as a general partnership in British Columbia, appealed a decision by the Director of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The business, co-owned by Frank Suppanz and Lisa Suppanz, had been examined for compliance in 2019. FINTRAC found that Austin Jewellers failed to develop and apply a written compliance program and had not conducted or documented any risk assessments for money laundering or terrorist financing, despite being a reporting entity under the Act.

Following its investigation, FINTRAC issued a Notice of Violation identifying two serious breaches of the Act and proposed administrative monetary penalties of $33,000 per violation. These were based on total non-compliance and classified as Level 1 harm. The Director later confirmed these penalties after considering representations from the business, which argued that the penalties were excessive given their financial circumstances and that the business had closed its storefront. The Director found no evidence that justified lowering the penalties further, noting that no substantial compliance documents had been submitted and that financial information about one of the two partners was missing. The Director also determined that no due diligence defense was established.

On appeal, Austin Jewellers contended that the Director erred by failing to consider alternatives to penalties, such as a compliance agreement, and by imposing disproportionately harsh penalties. The Court dismissed both arguments. It ruled that the Director was not obligated to consider a compliance agreement since that authority lies with FINTRAC prior to the Director’s decision-making phase. The Court also held that the Director properly considered the seriousness of the violations, the firm's lack of remedial actions, and the absence of a complete financial picture.

Justice Andrew D. Little of the Federal Court upheld the Director’s decision, concluding that there were no palpable and overriding errors or errors of law. The appeal was dismissed, and Austin Jewellers was ordered to pay $2,000 in costs to the Attorney General of Canada.