[2018] Lack of anti-money-laundering compliance in British Columbia real estate


Eby troubled by lack of anti-money-laundering compliance in B.C. real estate sector

B.C. Attorney General David Eby says he is troubled by the continued lack of compliance with anti-money-laundering controls at B.C. real estate firms revealed in the latest deficiency reports.
According to figures obtained by Postmedia News, and reported Monday, Canada’s financial intelligence watchdog found “significant” and “very significant” deficiencies in the money-laundering controls at 88 per cent of 130 real estate entities they examined in B.C. over the last two years.
The companies were not identified by name.
The finding was similar to one made two years earlier when the watchdog, the Financial Transactions and Reports Analysis Centre of Canada or Fintrac, conducted 79 examinations  in B.C.’s real estate sector, uncovering 71 companies — or 89 per cent — with “significant or very significant” deficiencies.
The heads of the Real Estate Council of B.C. and of the B.C. Real Estate Association said they supported Fintrac efforts, but couldn’t say if real estate companies have tightened their controls.
“It is obviously troubling that there is such a systematic problem with compliance with the basic reporting requirements for the industry. It is not like there hasn’t been profile on this issue. It’s not like there haven’t been headlines,” Eby said on Monday. “I don’t understand why the industry almost as a whole feels like there is no need to follow federal law in terms of reporting obligations.”
Eby said the continued lack of compliance underscores the need for the review the B.C. government has said it will launch of transactions in the real estate sector. That’s the next step after a money-laundering review of casinos by former RCMP deputy commissioner Peter German who concluded Lower Mainland casinos operated for years as “laundromats for the proceeds of organized crime.”
Eby said the compliance shortcomings in the real estate sector make him wonder what other rules are not being followed and what other problems exist.
“Is there a reason why these rules aren’t being followed?” he said. “All these questions, I hope our review is going to assist in answering.”


Eby said he expected his government would raise the issue of real estate money-laundering compliance with the federal government.
Under Canada’s anti-money-laundering laws, real estate firms are required to report suspicious transactions and all cash transactions over $10,000. The firms must have compliance measures in place that include a compliance officer, written compliance policies and procedures, a money-laundering risk assessment, a compliance training program and a documented review of the effectiveness of their compliance efforts.
Among key responsibilities for real estate firms are keeping proper records and identifying individuals involved in real estate sales.
Between 2015 and 2017, Fintrac conducted 343 examinations in the real estate sector in Canada, 130 of which were in B.C., with 87 of those in Vancouver and the Lower Mainland.
Fintrac provided statistics to Postmedia showing that out of those 130 examinations, they uncovered 115 cases of ‘significant’ or ‘very significant deficiencies’ in their policies and procedures, risk assessment, record keeping, reporting and client identification obligations.
Christine Duhaime, a lawyer who specializes in anti-money-laundering laws, said she was not surprised by the findings but said the figure of 88 per cent non-compliant was high.
“It is so out of sync with what the law requires,” said Duhaime. “It’s clearly a signal they need help quickly.”
Duhaime said she hopes the attention will lead to more emphasis on training and understanding of anti-money-laundering compliance, noting compliance deals with complicated legislation and training can be expensive.
It might be necessary for the federal government to step in and assist with training, she said.
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By piotrbein