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B.C. real estate industry recommends amending federal money laundering laws to improve enforcement

B.C. real estate industry recommends amending federal money laundering laws to improve enforcement
Canada
A condo building is seen under construction surrounded by houses as condo towers are seen in the distance in Vancouver, B.C., on Friday March 30, 2018.

On Monday, five industry groups, including the B.C. Real Estate Association (BCREA), submitted five joint recommendations, including mandatory training for realtors on recognizing suspicious wealth, a “best practices” guideline that asks real estate professionals to reject cash transactions, and federal legal reforms to enable better enforcement of money laundering.

In an interview, BCREA chief executive Darlene Hyde said that Canada’s governments and financial regulators have been operating with a “fractured, silo approach” that has been ineffective in fighting dirty money.

Hyde said industry groups support the recently filed review into real estate money laundering concerns by former Mountie Peter German, and they want to collaborate with B.C.’s government in order to crack down on bad actors.

Under Canada’s current laws, financial professionals including bankers, realtors and casino operators must submit suspicious transaction reports for Fintrac, the anti-money laundering agency. But Fintrac does not have investigation powers, and police are not allowed to search Fintrac’s data.

Fintrac makes disclosures to police when it is deemed appropriate. The result, according to some critics, is Fintrac has been a “black hole” of valuable information on criminal suspects.

In response, the B.C. real estate professionals have recommended: “the federal government amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow Fintrac intelligence to be made available to additional regulatory authorities, including the BC Securities Commission and the Financial Institutions Commission.”

This recommendation appears to gain even more significance, a officers criminally investigating money laundering in B.C.

One prominent B.C. real estate professional, who asked not to be named for fear of backlash in the industry, said to his knowledge, after 15 years of Fintrac collecting transaction reports from realtors, he is not aware of a single money laundering prosecution against a B.C. realtor.

“How is it that the government of B.C. was unaware the RCMP did not have dedicated officers assigned to this program when it was known to me for several years?” the professional said. “As far as real estate purchases and sales are concerned, the current regulatory model for money laundering has not worked, will not work, and needs a very thorough review.”

“Nobody knows,” BCREA chief executive Hyde said, when asked if she is aware of any money laundering prosecutions of B.C. realtors that stemmed from reports to Fintrac.

“It’s a big secret. You mention the words, ‘black hole?’ We don’t know who has been prosecuted or fined.”

The investigation uncovered a secret RCMP study

“We don’t have visibility into the criminal activity,” Hyde said. “I have no idea [the scale of real estate money laundering] but B.C.’s government must believe there is an issue, for them to put Peter German on the case. And we are totally supportive of the government initiative.”

The other organizations participating in the joint submission are the Appraisal Institute of Canada — BC Association, BC Notaries Association, Canadian Mortgage Brokers Association — British Columbia, and the Real Estate Board of Greater Vancouver.
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