Manulife: Banking unit was penalized by Fintrac

TORONTO — Manulife Financial Corp. confirmed Monday its banking unit was penalized last year after Canada’s money-laundering watchdog concluded it failed to report a suspicious transaction and various money transfers.

Last year, Fintrac fined the bank $1.15 million, but it withheld the bank’s identity, saying it was exercising its discretion to do so.

Manulife Financial issued a statement Monday saying Manulife Bank was fined for “administrative lapses.”

“Although we operate at the highest ethical standard, we are capable of administrative errors. They were remedied in the first half of 2014,” the company said.

“There is no evidence to suggest that the administrative reporting violations were connected to any financial misconduct.”

The statement came after the CBC, citing anonymous sources, identified Manulife Bank as the financial institution fined by Fintrac last year.

Experts speculated Fintrac’s decision to not name Manulife Bank could have come from an agreement whereby Manulife agreed not to pursue an appeal and pay the $1,154,670 fine in exchange for anonymity. Neither Fintrac nor Manulife have confirmed such a deal took place.

The office of Finance Minister Bill Morneau deferred comment to Fintrac, which did not immediately respond to requests for comment.

It’s likely Fintrac had such an agreement and felt a significant fine would be enough to satisfy the Canadian public, said Christine Duhaime, a lawyer at Duhaime Law, which specializes in counter-terrorist financing and anti-money laundering law practice.

However, there was significant backlash as the public felt granting a large corporation anonymity — something an average Joe wouldn’t be entitled to — wasn’t fair, she said.

The public needs to know who the entity behind such a large fine is, Duhaime said, adding she believes Fintrac won’t grant anonymity like this again if a similar matter comes up.

As a bank’s reputation is important to them, Duhaime said deterrents like naming them for wrongdoings can be effective.

“I think everybody probably learned a good lesson here about transparency and accountability to the Canadian public.”

Manulife Financial said in its statement that it did not enable or facilitate money laundering.

“One violation involved a customer who had already been reported to law enforcement and Fintrac by Manulife. Additional information released by Fintrac in 2016 shows that Manulife proactively worked with law enforcement in both Canada and the United States in relation to the matter underlying the one suspicious transaction report (STR) violation, including advising law enforcement prior to the failure to file this one STR.”

Manulife Financial (TSX:MFC), one of the country’s biggest financial services businesses, said it considers the matter closed and doesn’t plan further comment. A spokesman declined to answer any questions on the matter.

Since March 2012, Fintrac has meted out $3.54 million in fines against 79 entities. Manulife Bank is the only bank to have been fined by Fintrac in that time and its penalty is the largest of any that the federal agency has issued.