Anti-Money Laundering: Opportunities for Action
TAGS: Anti-Money Laundering
A public inquiry into money laundering has now been ordered. This has been a media favourite for a long time, and certainly since the reports of Peter German and the Expert Panel on Money Laundering in BC Real Estate were published on May 9. Here's a quick summary of BCREA's actions, analysis and how we're supporting REALTORS®.
In recent months, BCREA participated in both of the provincial government reviews, commissioned a vulnerability assessment of residential and commercial transactions and worked with four other real estate sector organizations on joint AML best practices and recommendations.
Both Peter German and the Expert Panel criticize REALTORS® for not filing many suspicious transaction reports and for poor compliance statistics with FINTRAC. To be clear, they also criticize FINTRAC for not providing the best feedback, data and resources. And both reports call out many other professions and the provincial and federal governments. The Expert Panel also explains that real estate is complex and it can be difficult to identify criminal activity in a context where most people are legitimate. While some media reports have focused on REALTORS® and “real estate firms,” the reports don't.
The Expert Panel makes 29 recommendations (Peter German only reports his findings and observations), and BCREA's perspective is reflected in 16 of them. We agree with the Expert Panel that lawyers and other professionals involved in potentially vulnerable aspects of real estate transactions should become part of the anti-money laundering monitoring and compliance system. We also strongly support coordination among governments and government agencies, the need for regulators to educate professionals about their reporting obligations and improved public reporting by FINTRAC.
Here are a few more Expert Panel recommendations that haven't been reported (the following language has been simplified):
6. The BC government should implement the recommendations of the Perrin report to improve BC's real estate regulatory framework. The Perrin report recommends a single regulator under the Financial Institutions Commission (instead of the dual system we have now), and the government is already moving in that direction
7. Individual real estate licensees—rather than managing brokers—should be responsible for their own compliance with the Real Estate Services Act and the [federal] Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This is a new direction.
8. Developers should be licensed under the Real Estate Services Act and the exemption from the Act for developers' employees should be eliminated. BCREA's always been on record that people who work for developers should be licensed; the biggest question we have about licensing developers is how that would impact our own regulatory system.
We're optimistic that, if implemented, the Expert Panel's recommendations will help create an efficient, comprehensive system to keep the proceeds of crime out of real estate. But that could take a long time, since many of the recommendations are complicated and require legislative changes at the federal and provincial levels.
In the meantime, BCREA is representing the REALTOR® voice as the government considers these recommendations. We're also working with member boards on resources to help REALTORS® meet their FINTRAC compliance requirements. More information will be available soon, and we welcome feedback and suggestions at any time.
Find the Expert Panel and Peter German reports below, as well as BCREA’s submission to the Expert Panel and our response following the release of the two reports:
Expert Panel report – Combatting Money Laundering in BC Real Estate
Peter German report – Dirty Money – Part 2: Turning the Tide – An Independent Review of Money Laundering in BC Real Estate, Luxury Vehicle Sales & Horse Racing
BCREA submission to the Expert Panel (March 4, 2019)
BCREA news release (May 13, 2019)
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