Eby eyes re­view of real es­tate trans­ac­tions

Watch­dog finds de­fi­cien­cies in money-laun­der­ing con­trols at 88 per cent of firms ex­am­ined

The Province - - NEWS - GOR­DON HOEK­STRA ghoek­stra@post­media.com Twit­ter.com/gor­don_hoek­stra

B.C. At­tor­ney Gen­eral David Eby says he is trou­bled by the con­tin­ued lack of com­pli­ance with anti-money-laun­der­ing con­trols at B.C. real es­tate firms re­vealed in the lat­est de­fi­ciency re­ports.

Ac­cord­ing to fig­ures ob­tained by Post­media News, and re­ported Mon­day, Canada’s fi­nan­cial in­tel­li­gence watch­dog found “sig­nif­i­cant” and “very sig­nif­i­cant” de­fi­cien­cies in the money-laun­der­ing con­trols at 88 per cent of 130 real es­tate en­ti­ties they ex­am­ined in B.C. over the last two years.

The com­pa­nies were not iden­ti­fied by name.

The find­ing was sim­i­lar to one made two years ear­lier when the watch­dog, the Fi­nan­cial Trans­ac­tions and Re­ports Anal­y­sis Cen­tre of Canada or Fin­trac, con­ducted 79 ex­am­i­na­tions in B.C.’s real es­tate sec­tor, un­cov­er­ing 71 com­pa­nies — or 89 per cent — with “sig­nif­i­cant or very sig­nif­i­cant” de­fi­cien­cies.

The heads of the Real Es­tate Coun­cil of B.C. and of the B.C. Real Es­tate As­so­ci­a­tion said they sup­ported Fin­trac ef­forts, but couldn’t say if real es­tate com­pa­nies have tight­ened their con­trols.

“It is ob­vi­ously trou­bling that there is such a sys­tem­atic prob­lem with com­pli­ance with the ba­sic re­port­ing re­quire­ments for the in­dus­try. It is not like there hasn’t been pro­file on this is­sue. It’s not like there haven’t been head­lines,” Eby said on Mon­day. “I don’t un­der­stand why the in­dus­try al­most as a whole feels like there is no need to fol­low fed­eral law in terms of re­port­ing obli­ga­tions.”

Eby said the con­tin­ued lack of com­pli­ance un­der­scores the need for the re­view the B.C. gov­ern­ment has said it will launch of trans­ac­tions in the real es­tate sec­tor. That’s the next step af­ter a money-laun­der­ing re­view of casi­nos by for­mer RCMP deputy com­mis­sioner Pe­ter Ger­man who con­cluded Lower Main­land casi­nos op­er­ated for years as “laun­dro­mats for the pro­ceeds of or­ga­nized crime.”

Eby said the com­pli­ance short­com­ings in the real es­tate sec­tor make him won­der what other rules are not be­ing fol­lowed and what other prob­lems ex­ist.

“Is there a rea­son why these rules aren’t be­ing fol­lowed?” he said. “All these ques­tions, I hope our re­view is go­ing to as­sist in an­swer­ing.”

Eby said he ex­pected his gov­ern­ment would raise the is­sue of real es­tate money-laun­der­ing com­pli­ance with the fed­eral gov­ern­ment.

Un­der Canada’s anti-money-laun­der­ing laws, real es­tate firms are re­quired to re­port sus­pi­cious trans­ac­tions and all cash trans­ac­tions over $10,000. The firms must have com­pli­ance mea­sures in place that in­clude a com­pli­ance of­fi­cer, writ­ten com­pli­ance poli­cies and pro­ce­dures, a money-laun­der­ing risk assess­ment, a com­pli­ance train­ing pro­gram and a doc­u­mented re­view of the ef­fec­tive­ness of their com­pli­ance ef­forts.

Among key re­spon­si­bil­i­ties for real es­tate firms are keep­ing proper records and iden­ti­fy­ing in­di­vid­u­als in­volved in real es­tate sales.

Be­tween 2015 and 2017, Fin­trac con­ducted 343 ex­am­i­na­tions in the real es­tate sec­tor in Canada, 130 of which were in B.C., with 87 of those in Van­cou­ver and the Lower Main­land.

Fin­trac pro­vided statis­tics to Post­media show­ing that out of those 130 ex­am­i­na­tions, they un­cov­ered 115 cases of ‘sig­nif­i­cant’ or ‘very sig­nif­i­cant de­fi­cien­cies’ in their poli­cies and pro­ce­dures, risk assess­ment, record keep­ing, re­port­ing and client iden­ti­fi­ca­tion obli­ga­tions.

— NICK PROCAYLO/FILES

B.C. At­tor­ney Gen­eral David Eby says he ex­pects the prov­ince to raise the is­sue of real es­tate mon­ey­laun­der­ing com­pli­ance with the fed­eral gov­ern­ment.

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