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B.C. RE sector boosts anti-money laundering efforts

Group submits recommendations to the government to help protect the housing market
Thursday, April 18, 2019
By Zandile Chiwanza

Key players in the real estate sector in British Columbia have submitted anti-money laundering recommendations to the provincial and federal government in an effort to help protect B.C.’s housing market from organized crime.

The five participating agencies are the British Columbia Real Estate Association, the Appraisal Institute of Canada – BC Association, BC Notaries Association, Canadian Mortgage Brokers Association – British Columbia, and the Real Estate Board of Greater Vancouver.

Late last year, the ministry of finance set up an expert panel to review money laundering in the real estate financial services sectors after two independent reports revealed that B.C.’s real estate market is vulnerable to criminal activity and market manipulation.

Around the same time, Attorney General David Eby commissioned former RCMP Deputy Commissioner Peter German to study whether there is evidence that real estate, luxury car sales and horse racing industries in B.C., are being used for money laundering.

“Every single dollar in the federal budget for anti-money laundering needs to come to B.C. yesterday,” Eby suggested in a statement in response to German’s review.

As of April 8, new amendments are in force in the federal Budget Implementation Act that could help combat money laundering if passed.

“Given that real estate transactions involve multiple professionals, it will take a coordinated effort and collaboration with the government to strengthen anti-money laundering measures in B.C.’s real estate market,” the participating organizations added in a statement.

The following are the anti-money laundering recommendations submitted to the government:

1. Accept only verified funds
For sectors of real estate that are not already required to do so, we recommend that they accept funds only in forms that are verifiable through Canadian financial institutions.

2. Mandatory anti-money laundering education
We recommend the introduction of mandatory anti-money laundering education for all real estate professionals subject to the reporting requirements administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure that those professionals are trained in recognizing and reporting suspicious transactions. FINTRAC should work with sector organizations, regulators and the provincial government to improve existing resources so that they better reflect real-world situations and improve compliance.

3. Smart regulation
We recommend that 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 (FICOM). Optimally, the federal and provincial governments, as well as their respective agencies, should coordinate their actions, share information, such as the provincial assignment registry, and create a comprehensive, efficient enforcement regime.

4. Ongoing engagement
We recommend governments and regulatory agencies, including FINTRAC, better utilize the on-the-ground experience of real estate professionals to develop compliance resources and test policy ideas. This will result in well-crafted, practical regulation and foster a culture of compliance to protect consumers and the economy.

5. Timely and transparent reporting
We recommend that FINTRAC implement a framework to identify and report trends on a regular basis and in language that is consistent and understandable to professionals, the public and media. This reporting system should also include consistency in examinations with immediate feedback designed to help industry professionals improve their compliance systems.

The group also committed to sharing best practices to help keep the proceeds of organized crime out of the economy.

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