BCREA Calls for Increased Federal/Provincial Cooperation to Tackle Money Laundering in BC
CATEGORY: Advocacy News Releases
TAGS: Anti-Money Laundering Cullen Commission Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
Vancouver, BC – February 26, 2020. Today, the BC Real Estate Association makes our opening statement to the Cullen Commission of Inquiry into Money Laundering in British Columbia.
“We are committed to working with government to better understand this issue and address any pre-existing vulnerabilities within our sector,” says BCREA CEO Darlene Hyde. “It is our hope that by working collaboratively we can steer a path forward that strengthens consumer protection measures and limits illicit impact on the housing market”.
To date, there have been few dependable statistics that indicate the true size and scale of money laundering in the BC real estate sector. Estimates often quoted from the Maloney Expert Panel Report on Money Laundering are based on the Utrecht Gravity model, which is not evidence-based. Figures as high as $5.3 billion are frequently quoted from the report, but by Maloney’s own admission those figures are at best a calculated guess, based on theoretical models.
Money laundering exists in the shadows. To truly address this issue and stem the tide of illicit funds will require coordinated effort at the international, federal and provincial levels with harmonized data sharing and joint investigative efforts.
“It is our hope that the outcome of this commission is a clearer, evidence-based indication of the scale of money laundering in BC,” says Hyde.
Last April, in collaboration with several sector stakeholder groups, we issued recommendations to assist with identifying and recommending necessary change. We continue to urge the provincial and federal governments to consider these recommendations:
- 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.
- 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. As a first step, we were pleased to see the Real Estate Council of British Columbia introduce mandatory training for real estate professionals in January. 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.
- 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 BC Financial Services Authority. 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.
- Ongoing engagement - We recommend governments and regulatory agencies, including FINTRAC, better utilize 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.
- 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.
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