Fourteen years ago, Canada introduced the Proceeds of Crime and Terrorist Financing Act that requires real estate agents to report suspicious activity to the Financial Transactions and Reports Analysis Centre of Canada (Fintrac). Under the regulations, realtors and property developers must also report any large cash transactions involving amounts of $10,000 or more.
Christine Duhaime, a Vancouver lawyer specializing in anti-money laundering and counter-terrorist financing, said most of the realtors she has met have no compliance plan, no compliance officer and don't know what a suspicious transaction is or how to report one.
“Real estate in Vancouver is certainly more susceptible to money laundering than any other sector,” said Duhaime.
Duhaime, and others, have a suspicion of where most of the money is coming from.
“There’s a significant problem with Chinese officials who are absconding with state funds,”David Mulroney, Canada’s former ambassador to China, told an audience at the University of British Columbia in March2015, adding “China is the number one exporter of hot money in the world.”
The Canadian Pressreported this month that at least 85 Canadian real estate firms have not fully implemented compliance plans intended to flag questionable transactions — including cases where money laundering is suspected — nearly 15 years after they were legally required to do so.
Data obtained from Fintrac through an access-to-information request showed that 38 companies had only partially implemented a compliance regime while another 47 had not at all. The names of the companies were not included in the documents.
The data was compiled from 337 compliance assessment reports that were submitted to the federal anti-money laundering agency from roughly 1,000 companies in the real estate sector. It represents only a sliver of the overall industry — there are about 20,000 real estate companies overseen by Fintrac.
A spokeswoman for Finance Minister Bill Morneau, to whom Fintrac reports, directed questions to the federal agency.
Darren Gibb,a spokesman for Fintrac, said compliance assessment reports are only one tool that the agency uses in its enforcement process.
"They educate our risk-based approach, and that's essentially all that they're supposed to do," Gibb said.
Fintrac has used the data gathered from the compliance reports to significantly boost the number of on-site examinations it is performing in the real estate sector, he said.
It has also invested "significant time and effort" into working with the real estate industry and the Canadian Real Estate Association to help realtors better understand their obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, Gibb added.
"I literally have never met a realtor across the country who really understands or fully complies with AML [anti-money laundering] law," Duhaime said.
- With files from Victoria Times Colonist /CP