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.
“It serves more as a warning to everyone,” said Allington. “This is an off-street strip mall in Coquitlam that's assisting the local community with their small jewelry needs.”
“He committed no crime. Unfortunately, he had some difficulties with his record keeping, and that attracted the attention of Fintrac, and he's hit with this extremely punitive penalty.”
Shop failed to keep transaction records, carry out risk assessment
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.
Jeweller argues penalties should total $500
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.
“You will not break me,” an October 2024 Facebook post states. “The money laundering that goes on in your casinos is crazy. I don’t have some paperwork. And you fine me to the point of destroying Austin Jewellers is crazy.”
Appeal failed to show Fintrac erred
Suppanz appealed the decision to the federal court. At a May 22 hearing, he claimed at a Vancouver courthouse that the violations were wrongly classified at the highest level of harm. Among other claims, he also argued that Fintrac failed to explain why a lower penalty would not achieve the same objectives under the act.
In a decision released Friday, Justice Andrew Little found Suppanz had failed to show the Fintrac director had committed any “palpable and overriding error” in her decision.
He noted Fintrac found one transaction worth more than $10,000 and that the business had carried out transactions with members of the Hells Angels. Allington said his client had purchased a single large diamond and that raised flags with Fintrac. His client’s connections with the Hells Angels should have no impact on Fintrac’s decisions, the lawyer said.
“So what if he services customers who may be members of the Hells Angels. So what? Why should that ever factor into anything?” Allington said. “Any member of the community can access any service they wish, as long as they're doing it lawfully.”
In his decision, the judge wrote that Suppanz's submissions that he had bookmarked Canada's anti-money laundering laws on his computer browser “did not constitute compliance.” Little also said that Austin Jewellers had made “no improvement” in its compliance and risk assessment policies and procedures.
Ultimately, Little found Fintrac’s decision to penalize the jeweller were sound.
“The director’s reasons were clear that the violations were serious,” wrote Little, adding that “imposing no penalty or attempting other remedial alternatives were not realistic options.”
The judge dismissed the appeal and ordered Austin Jewellers to pay $2,000 in legal fees.
