The real estate sector is highly vulnerable to money laundering and terrorist financing
Joane Leroux
REM
I would like to respond to Jorge Branca’s letter to the editor, FINTRAC: The nemesis of our forest? by highlighting how Canadian businesses, FINTRAC and police and national security agencies all have a role to play in creating a hostile environment for those who seek to abuse our financial system or threaten the safety of Canadians.
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act establishes obligations for real estate and other businesses, including to identify clients, keep records and report certain types of financial transactions. These obligations are essential in detecting illicit activity and deterring criminals from operating within the legitimate economy. For example, eliminating the anonymity of the client serves as an important measure of deterrence. And, keeping records ensures that police will have access to the information and evidence they may require as part of their criminal investigations.
In its Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada, the federal government found that the real estate sector is highly vulnerable to money laundering and terrorist financing, given “its size and scope and (the fact that it) generates a large number of high-value financial transactions on an ongoing basis.” This is consistent with the assessment of the Financial Action Task Force, an internationally recognized body that sets global standards for combating money laundering and terrorist financing.
Based on these assessments and other information, including media reporting and concerns raised in Vancouver, Toronto and elsewhere, FINTRAC has significantly increased its examinations in the real estate sector. Over the past two years alone, the centre conducted 343 real estate examinations nationwide.
We are also working to assist the real estate sector in fulfilling its legal obligations by providing extensive guidance, policy interpretations, responses to inquiries and presentations to provincial and municipal real estate boards. Last year, we published the Operational Brief: Indicators of money laundering in financial transactions related to real estate to help real estate in identifying and reporting suspicious transactions relating to money laundering or terrorist activity financing. We developed this material in consultation with the Canadian Real Estate Association and the Organisme d’autoréglementation du courtage immobilier du Québec.
FINTRAC remains committed to working with the real estate sector to ensure it understands and fulfils its legal obligations. However, when that doesn’t happen, we may impose an administrative monetary penalty. Since 2008, the centre has imposed 95 penalties in all sectors covered under the act. I would like to emphasize that, as we finalize our review of our penalty program, we retain the full authority to levy an administrative monetary penalty should it be warranted.
Canada’s anti-money laundering and anti-terrorism financing regime is dependent on businesses across the country fulfilling their legal obligations, particularly providing FINTRAC with timely and high-quality reports. These reports are the lifeblood of our analysis and made it possible for us to provide 2,015 disclosures of actionable financial intelligence last year in support of police investigations targeting fentanyl trafficking, fraud against Canadians and other serious crimes in our communities. You can find FINTRAC’s contributions to some of these investigations on our website.
We are committed to working with our police and national security partners and businesses across the country to help protect Canadians and Canada’s legitimate economy, the stability of which is of tremendous benefit to the real estate sector.
All of us – including real estate – have an important role to play.
© 2017 REM Real Estate Magazine