by Merv Burgard, Q.C
Does your brokerage have a plan to prevent money laundering and other suspicious transactions?
“At least 85 real estate companies have not implemented a plan showing how they are trying to detect money laundering and other suspicious transactions, nearly 15 years after they were required to do so, according to data obtained by The Canadian Press.”
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada's financial intelligence unit, was created in 2000. Its goal is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control.
FINTRAC is an independent agency reporting to the Minister of Finance, who is accountable to Parliament for its activities. It was established and operates within the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its regulations. It aims to enhance cooperation and information exchange in support of member countries' anti-money laundering and terrorist financing regimes.
Some real estate brokerages have as yet failed to comply with the legislation by developing a FINTRAC plan. Read the Toronto Star article.
Is FINTRAC really chasing people? Here are some recent examples of the consequences of the failure to implement compliance policies.
- Howell Investment Management Inc., a securities dealer in Etobicoke, was imposed an administrative monetary penalty of $13,500 on March 11, 2016, for violating the PCMLTFA and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR). Howell was found to have the following deficiencies: Failure to develop and apply written compliance policies and procedures; failure to assess and document the risks related to money laundering and terrorist financing; and failure to develop and maintain a written, ongoing compliance training program.
- Becksley Capital Inc., a securities dealer in Toronto, was imposed an administrative monetary penalty of $28,500 on Dec. 9, 2015, for violating the PCMLTFA and the PCMLTFR for similar failures.
- Diamond Exchange Toronto Inc., a dealer in precious metals and stones in Toronto, was imposed an administrative monetary penalty of $12,750 on March 9, 2016, for violating the PCMLTFA and the PCMLTFR for similar failures.
- Victoria Jewellers Ltd. a dealer in precious metals and stones in Regina, Saskatchewan, was imposed an administrative monetary penalty of $13,500 on Feb. 19, 2016 for violating the PCMLTFA and the PCMLTFR for similar failures.
Is your brokerage -- and are your brokers and salespeople -- compliant with this legislation? The Canadian Real Estate Association (CREA) has developed template materials to help you comply. See the following web sites for help:
New template FINTRAC training materials and also in the CREA section of the REALTOR Link® website under Legal Compliance & National Standards - Compliance Resources - Money Laundering (FINTRAC).
Mervin Burgard, Q.C.
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