Argosy Securities Fined by FINTRAC for AML Compliance Failures

Argosy Securities Inc., an independent wealth management firm based in Richmond Hill, Ontario, has been fined by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for failing to meet regulatory requirements designed to prevent money laundering and terrorist financing.

The administrative monetary penalty, amounting to CAD 66,000, was issued on 20 December 2024 following a compliance examination. According to FINTRAC, the violations stemmed from deficiencies in Argosy’s written policies, risk assessments, and compliance reviews. The firm has paid the penalty in full, and no further proceedings are expected.

FINTRAC determined that Argosy Securities did not have sufficiently developed or properly implemented compliance policies and procedures as required under the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations.

According to the agency, the firm lacked proper documentation concerning client identification procedures, record-keeping obligations, and the ongoing monitoring of business relationships. Reporting deadlines for suspicious and terrorist property transactions were also not clearly defined in the firm’s internal policies.

In addition, the firm’s compliance policies did not adequately reflect requirements related to ministerial directives—orders issued by the federal government in cases where certain jurisdictions or activities pose elevated financial crime risks.

Argosy Securities was also cited for failing to conduct a comprehensive risk assessment. FINTRAC’s review found that the firm’s risk analysis lacked detail on how money laundering and terrorist financing risks were assessed and mitigated.

The examination report highlighted that the risk assessment did not consider essential variables, such as client profiles, delivery channels, or specific threats posed by Argosy’s business model. Furthermore, no rationale was provided to justify the risk levels assigned to different relationships or transactions.

A risk-based approach is a cornerstone of Canada’s anti-money laundering legislation, requiring firms to tailor their controls and monitoring based on the level of risk each client or service poses.

A third violation related to Argosy’s failure to conduct an adequate effectiveness review of its compliance programme. Canadian regulations require such reviews to assess whether internal systems are working as intended and to identify areas for improvement.

According to FINTRAC, Argosy’s review did not cover all necessary components, such as the firm’s risk assessment process. It also lacked details on how the firm tested the programme’s effectiveness or addressed previous deficiencies. Moreover, the required reviews were not carried out within the timeframe mandated by law.

Under Canada’s anti-money laundering and counter-terrorist financing regime, securities dealers and other financial service providers are obligated to develop comprehensive compliance programmes. These include detailed policies, robust risk assessments, regular staff training, and periodic programme reviews.

FINTRAC, operating under the authority of the Ministry of Finance, enforces these obligations through routine examinations and the power to issue administrative monetary penalties when firms are found in violation.

The fine imposed on Argosy Securities underscores the regulatory pressure faced by financial institutions in Canada to uphold robust compliance systems. Although the firm has resolved the matter by paying the penalty, the case highlights ongoing efforts by regulators to ensure that financial firms maintain high standards of vigilance against financial crimes.