Intro: This article appeared in the Globe and Mail and Business News Network on March 18, 2016. People need to ask about the scale of this problem, how long it has been going on, and the magnitude of impacts on Vancouver housing prices. See our CityHallWatch extensive post on FinTRAC and related topics over a year ago: Real estate industry has major role in fighting money laundering: Info for citizens (5-Mar-2015).
It appears the entire system has been dysfunctional and has failed society. Incompetence has prevailed in enforcement of rules, professional standards, regulations, and legislation. Now they play the blame game. Many realtors appear to have been misbehaving. Some may have been aiding and abetting money laundering, to their personal profit but with costs to society as a whole. The professional associations and industry watchdogs have been lax. The government regulators have failed to regulate. Money laundering is criminal, but by the nature of “laundering” it becomes increasingly hard to catch those who brought in the dirty money. The horses may be out of the barn and deeply entrenched in the Metro Vancouver real estate market. We urge citizens to call on elected officials and the authorities to pursue this topic, prosecute criminals, and enforce regulations and penalties with the full force of the law. Citizens need to call for this, as obviously those who were entrusted to prevent money laundering have failed us. So far.
Below are excerpts of the article. We urge readers to go to the source for the full story.
Vancouver housing market ‘vulnerable’ to money laundering
(Kathy Tomlinson, Globe and Mail, and in Business News Network, 18-March-2016)
- Dozens of Vancouver-area real estate firms are failing to comply with federal anti-money-laundering laws that require them to identify who their clients are and where their money comes from, The Globe and Mail has learned.
- The Financial Transactions and Reports Analysis Centre (FinTRAC), which enforces the legislation, says it found “significant” or “very significant” deficiencies within some five dozen B.C. brokerages in the past year. It decided to step up scrutiny over worries that money primarily from China is being laundered through Vancouver real estate.
- “There were concerns being raised that those in the real estate sector were not fulfilling the obligations under the act, as well as other concerns expressed about the movement of money,” said spokesperson Darren Gibb. “The real estate sector is highly vulnerable to money laundering.”
- Federal examiners visited 80 realty offices in the Vancouver area to delve into their paperwork and procedures. In 55 instances – most involving brokerage firms and some focusing just on individual agents – they found practices significantly lacking. In an undisclosed number of additional cases, the violations are serious enough to warrant fines.
- “The very significant deficiencies will lead to additional enforcement action and possibly penalties,” said Mr. Gibb. “We found a number of obligations that were not being respected.”
- FinTRAC found that some real estate agents were neglecting to get proper ID from clients, such as drivers’ licences or passports.
- Attempts to verify sources of money were found to be inadequate or non-existent. According to the agency, some brokerage firms were also failing to report suspicious or large cash transactions, which is also required by law. Between 2012 and 2015, the agency received just seven reports of that nature from the real estate sector in Vancouver.
- The 80 entities put under examination were not chosen randomly. FinTRAC says it targeted brokerage firms and agents it had complaints or concerns about, including those doing a large number of transactions.
- The findings come after a Globe investigation into speculation and flipping led the B.C. government to also put the real estate industry under scrutiny. An advisory group is now looking at any practice “that could pose a risk to consumers or that fails to meet the standards expected by the public.”
- The Canadian Real Estate Association (CREA), which leads industry training on anti-money-laundering compliance, says it understands there is a problem but it blames the federal agency. It calls FinTRAC’s training webinar “clearly insufficient,” while it says the industry invested “heavily” in two staffers plus outside firms to bring members up to speed.
- … A Vancouver real estate agent who sits on the professional-conduct committee of the Real Estate Board of Greater Vancouver (REBGV) says he’s not surprised standards are lacking.
- “It’s too easy to become a Realtor in British Columbia, so the level of compliance is going to be a problem,” said Keith Roy of Re/Max Select. “The No. 1 way to increase public protection is to have more than a 10-week online course to get your licence.”
- …Money-laundering expert Christine Duhaime says the federal agency deserves credit for increasing enforcement, but it should do more.
- “I do think it’s good that FinTRAC is increasing its compliance. I just wish they’d do 800 [examinations] instead of 80,” said the Vancouver lawyer, who adds that she talks to many agents who are uninformed.
- … FinTRAC acknowledges that even when it does collect information, it normally isn’t passed on to police. Generally, that only happens if a crime is suspected in Canada, over and above questionable transactions. For example, money derived from the illicit sale of drugs in Canada….
Read all online.