Court says Fintrac failed to balance compliance goals and harm assessment in six-figure fine linked to money laundering oversight
Re/Max Kelowna, operating under Norwich Real Estate Services Inc., has been granted a chance to appeal a $156,750 fine for anti-money laundering (AML) violations after a federal court in Ottawa found enforcement errors by Canada’s financial watchdog, Fintrac.
The April 10 ruling found that the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) made key errors in its penalty assessment. Although the brokerage acknowledges it failed to report suspicious transactions linked to an international stock fraud scheme between 2011 and 2019, the court determined Fintrac’s approach to calculating the fine did not properly follow the law.
The case revolves around the sales of two properties in Kelowna and at Big White Resort, which Fintrac said raised “reasonable grounds to suspect” money laundering or terrorist financing activities. The brokerage accepted that suspicious transaction reports should have been filed but argued it believed reports were unnecessary at the time because the properties were already under enforcement by the BC Director of Civil Forfeiture.
The court clarified that under the law, Fintrac must ensure penalties encourage compliance rather than serve as punishment, consider the actual harm caused, and review the company’s prior compliance record.
The transactions in question tie back to funds from Cuatro Cienagas Inversiones Ltd. (CCIL), a Hong Kong company linked to individuals like Benjamin Kirk, his wife Kayley Tyne Johnson, and Carlos Gomez Brana. CCIL used unregistered virtual financial firms tied to Roger Knox, who was sentenced in the US to three years in prison in 2023 for securities fraud, to purchase the properties.
The BC government’s 2019 forfeiture claim revealed CCIL bought a $1.6 million Mission Ridge Road home in May 2017 and a $524,000 Big White ski property in January 2018. The funds flowed through Norwich (Re/Max Kelowna) and an unnamed Kelowna law firm, originating from offshore Swiss firms.
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The civil forfeiture office ultimately secured a $2.15 million settlement, forcing the sale of the properties. Meanwhile, Kirk is facing ongoing civil fraud allegations from the US Securities and Exchange Commission, connected to a wide-reaching fraud network involving over a dozen BC individuals, including Fred Sharp, described by the SEC as the mastermind behind the scheme. Some conspirators have been found liable in civil court; others are facing unproven criminal charges.
Following the court’s decision, Fintrac will need to review the fine against Re/Max Kelowna and determine whether to adjust the penalty based on compliance goals, actual harm, and the brokerage’s record.
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