The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) recently announced two B.C. real estate brokerage firms have been fined for anti-money laundering (AML) violations.
One parent company, LeHomes Realty, has been issued its second such fine this year.
FINTRAC announced Oct. 13 an administrative monetary penalty of $275,385 on LaBoutique Realty Ltd., also operating as LeHomes Realty First in Vancouver.
LaBoutique Realty Ltd. failed to “submit a suspicious transaction report where there were reasonable grounds to suspect that transactions were related to a money laundering offence,” according to FINTRAC.
The firm was found to have also failed to submit a large cash transaction report for the receipt of $10,000 or more in cash and had no appointed person responsible for a compliance program.
Among other violations, there was also a “failure to take into consideration the money laundering or terrorist activity financing risk of its products and delivery channels, its geographic location or its clients and business relationships.”
LeHomes, formerly known as New Coast Realty, has a history of regulatory findings against it. and had another of its subsidiaries fined this year.
Pan Pacific Platinum Real Estate Services Inc. was fined $282,397 for similar violations.
On Oct. 18, FINTRAC announced brokerage firm Cathay Pacific Realty Ltd. was fined $206,250 for non-compliance with anti-money laundering laws.
Cathay also failed to submit a suspicious transaction report and had no compliance policies.
FINTRAC notes casinos, financial entities, money services businesses, real estate brokers and sales representatives and several other business sectors are required under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to keep certain records, identify clients, maintain a compliance regime and report certain financial transactions to FINTRAC.
The Commission of Inquiry into Money Laundering in B.C. found real estate to be vulnerable to money laundering, although it made no conclusion as to the extent such activity impacts home prices.
Of the 101 recommendations Commissioner Austin Cullen made in his June 15 final report, 40 are directly related to real estate, and several others are ancillary, such as proposals to strengthen AML policies within financial institutions and the asset forfeiture legal regime, as well as greater controls on notaries and lawyers, who process transactions.
Cullen’s recommendations suggest that real estate licensees are largely uneducated on AML measures and that both managing brokers and sub-brokers require education "focusing on the detection and reporting of fraud and money laundering in the industry."
Cullen also recommends the BC Financial Services Authority (BCFSA; formerly the Real Estate Council of BC) put in place measures for better data collection and that it implores real estate licensees and notaries to record source of funds information should FINTRAC not do so on a federal level. He also wants BCFSA to mandate AML programs at each brokerage as a licensing condition.