At a news conference Sunday afternoon, Joly said she does not regret publicly defending Bovet on Friday, but said she was supporting her candidate as a transgender person with a history of working in the sex trade, not as someone with questionable financial activity.
"We had to analyze the structure of her business and had serious doubts about the legality of her enterprise," said Joly.
"I met with Mme. Bovet, but still could not alleviate those doubts... Based on questions that remained inadequately answered, we decided to drop her as a candidate."
On Saturday, La Presse newspaper published an article claiming that Bovet was currently under investigation by Quebec's financial authority (AMF) over tens of thousands of dollars in currency investment.
Joly said that in light of the importance of removing corruption from Montreal city hall, she has to be certain that her candidates had clean financial records.
"Integrity in this election is very important and under the circumstances, that cannot be compromised," said Joly.
She said that because her campaign team is a small organization with limited resources, she could not have known that Bovet was under investigation by the AMF earlier.
"In the end, it was our organization's mistake, but it was an honest mistake," said Joly.
"the decision would be the same for all candidates."
Bovet will not be able to run as an independent candidate, because Oct. 4 nomination deadline has passed.