Combatting Money Laundering in BC Real Estate
On May 9, 2019 the Ministry of Finance’s Expert Panel on Money Laundering led by Maureen Maloney released its final report and recommendations to address money laundering in BC’s real estate markets. The report, Combatting Money Laundering in BC Real Estate, was released along with the remaining chapters of Peter German’s review into money laundering in real estate, luxury cars and horse racing. It is estimated that $5 billion was laundered through the real estate market in B.C. in 2018.
As both reports make clear, money laundering is a complex problem that requires action and cooperation between regulators, law enforcement and government at many levels. Earlier this spring RECBC became the first provincial real estate regulator in Canada to partner with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to share information related to risk factors for money laundering. We’re committed to working with FINTRAC to provide more education and information for real estate professionals in BC to make sure that real estate professionals understand when to report, how to report, and the consequences of not reporting suspicious transactions.
Our goal is to ensure a strong, safe real estate marketplace in BC, where consumers can have confidence in the advice and services of licensed real estate professionals.
As a provincial regulator with a mandate to protect the public interest by regulating the conduct of real estate professionals under the Real Estate Services Act, RECBC welcomes the recommendations in these reports to strengthen protection for real estate consumers. We look forward to working with Government to achieve its commitment to tackling money laundering in real estate.
Key recommendations with impacts for the regulation of real estate in BC from the Expert Panel on Money Laundering report include:
The BC government should implement the recommendations of the Real Estate Regulatory Structure Review report (2018).
The BC Minister of Finance should take the steps necessary to place the onus for compliance with the Real Estate Services Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act directly on individual real estate licensees.
The BC Minister of Finance should take the steps necessary to:
- require that real estate developers be licensed under a regulatory regime designed specifically for that segment of the real estate industry within the Real Estate Services Act;
- eliminate the exemption for salespeople who are employees of developers; and
- consider whether appraisers and home inspectors should also be licensed under the Real Estate Services Act.
The BC Minister of Finance should suggest to her federal counterpart that the Proceeds of Crime (Money Laundering) and Terrorist Financing Act be amended to require reporting entities in the real estate sector to conduct know-your-customer due diligence on beneficial ownership, as is required for several other types of reporting entities, and that the disclosure threshold for a beneficial ownership interest held by an individual be reduced from 25 percent to 10 percent.
The BC government should specifically add anti-money laundering to the mandates of relevant BC regulators, including the Real Estate Council of BC, the Office of the Superintendent of Real Estate, FICOM, the BC Securities Commission, the Society of Notaries Public of BC, the Law Society of BC and the Chartered Professional Accountants of BC.
Read the Expert Panel on Money Laundering in Real Estate’s full report:
Read Peter German’s report:
Read about RECBC’s partnership with FINTRAC: