Editor’s Note
This article details a recent court decision upholding significant fines against a British Columbia jeweller for violations of Canada’s anti-money laundering regulations. It underscores the ongoing enforcement of financial reporting laws.
A Coquitlam, B.C., jeweller and self-proclaimed member of the Hells Angels Motorcycle Club has lost his appeal to overturn $66,000 in penalties for violations of Canada’s anti-money laundering laws.
In 2023, the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) had handed Austin Jewellers two $33,000 penalties for violations of the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Under Canada’s anti-money laundering laws, casinos, financial entities, money services businesses, real estate brokers and sales representatives as well as several other business sectors are required to keep certain records, identify clients, maintain a compliance regime and report specific financial transactions to Fintrac.
Administrative monetary penalties handed out under the anti-money laundering act are meant to be non-punitive and are issued to encourage change in the non-compliant behaviour of businesses, according to Fintrac.
In her initial 2023 ruling, Fintrac’s director found that some of the jewelry shop’s clients were members of the Hells Angels Motorcycle Club and other third parties — both representing higher risk transactions involving precious metals and gems.
Members of the club had been linked to organized crime and convicted of criminal offences in Canada, the director noted.
Austin Jewellers’ owner Frank Suppanz claimed the Hells Angels was “a motorcycle club not a criminal organization.” He confirmed he was a member of the group, making and repairing jewelry for other Hells Angels members for 18 years as a “community-based jewelry repair shop.”
Suppanz deferred comment to his lawyer, Jordan Allington. In an interview, Allington said the case shows Fintrac will punish small “mom and pop” businesses with the same force as large jewelry retailers and real estate agencies.
In an initial violation of the anti-money laundering law, Fintrac’s director had found the jeweller had failed to document transaction invoices, and had no policies on record keeping, client identification and reporting transactions of precious metals and stones.
Suppanz had previously told the director of Fintrac that he had a 100-page procedure manual but could not find it. In 2019, the owner had provided a three-page document to Fintrac that failed to show the business was complying with the anti-money laundering act.
The initial violation, said the director, represented “total non-compliance” with Canadian laws to prevent money laundering.
The director also found the jeweller failed to assess and document the risk of money laundering and terrorist activity financing as it went about its business. The jeweller’s clients and business relationships, as well as its products, services and delivery channels may have posed a high risk, the Fintrac director found.
On June 27, 2023, the director issued Austin Jewellers two penalties totalling $66,000 — a reduced sanction that could have totalled $200,000 were it not the business’s first violation.
In submissions, Suppanz described one of the penalties as “harsh and extreme” because he knew about the Fintrac guidelines and would refer to its website if he had any concerns.
The jewelry shop owner also submitted he had suffered a serious injury in 2020 and was largely unable to work. The shop permanently closed its business in 2021 due to “local demographic changes and the impact of the COVID-19 pandemic,” he said.
Suppanz submitted he should be penalized $500 for the violations.
Since the initial 2019 Fintrac examination, Suppanz said he had been made aware that legal requirements required him to be vigilant in documenting all the money that came into the business. Suppanz said he also recognized he should look out for the kinds of customers that might want to use large sums of cash or request odd things.
But the director ruled such a small penalty “was not at all aligned with the facts of the case.” And while the storefront appeared to have closed, the business was found to have continued online through an active website and Facebook page.
The appeal failed to show Fintrac erred in its decision.
