CRA considers penalties under the U.S. Bank Secrecy Act not to be tax penalties

Although FBAR forms and penalties are administered through the IRS, CRA considers FBAR penalties not to be in respect of US taxes owing - a position based mainly on the FBAR penalties being imposed under the U.S. Bank Secrecy Act.  Therefore, CRA does not consider itself obligated to collect such penalties under Article XXVI-A of the Canada-U.S. Tax Convention.  This reasoning probably applies to other penalties that are not imposed under the Internal Revenue Code.

Scott Armstrong.  Summary of 25 July 2012 T.I. 2011-0427221E5 under Treaties - Article 26A.