Vancouver's housing market vulnerable to money laundering says federal agency
Realtors counter that federal rules keep changing
Scores of real estate firms in Greater Vancouver aren't complying with federal anti-money laundering regulations that compel them to identify clients and keep precise records, according to the federal agency that enforces these laws.
Last summer, the Financial Transactions and Reports Analysis Centre (FINTRAC) began to look closely at the real estate sector in Vancouver, quadrupling the number of examinations it carries out.
It said examiners visited more than 80 real estate firms, and found dozens of instances where they failed to comply with federal regulations.
Among other things, the examiners found that the some real estate firms weren't following record-keeping practices, had failed to identify clients, and didn't properly assess risk.
FINTRAC spokesman Darren Gibb said the agency found that in 55 cases, the real estate firms' practices were "significantly" below standards.
As a result, Gibb said Vancouver's real estate market "is at risk for being used for money laundering."
He said several of the violations were serious enough to warrant fines. In the past, Gibb said the agency has uncovered poor record-keeping in Vancouver-area real estate firms, but the latest results mark a "significant increase from previous years."
The agency's findings come amid allegations that some realtors in Vancouver's hot housing market have gained financially from by a practice known as "shadow flipping."
On Friday, Premier Christy Clark announced that real estate agents will no longer be able to profit from shadow flipping. Clark said the government was closing a loophole around the practice of contract assignments that will demand sellers not only give consent to any assignment put in place, but must give informed consent.
Foreign ownership has also become a contentious issue. A study conducted last year that suggested that foreign buyers from China are fuelling price increases sparked cries of racism.
Agents say rules change
The FINTRAC findings sparked an indignant exchange Friday with the Canadian Real Estate Association (CREA), which trains realtors.
Randall McCauley, CREA's vice-president of government and public relations, conceded that it has to do a better job educating realtors on the laws and compliance. But McCauley said FINTRAC rules related to real estate change so often, it's hard to keep up.
"The regulations change, and as they change, it's hard to keep pace," McCauley said. "That's why we've invested time and effort to help brief our members."
But Gibb argued that federal anti-money-laundering laws have been in place since 2001 and it's up to realtors to know —and adhere to — those laws. He said the agency has spent a lot of time with realtors explaining their obligations.
"The real estate sector needs to understand that that we all have a shared responsibility," he said. "They simply need to follow the law, which FINTRAC will enable, but we'll also ensure that they do."
In recent years, Gibb said FINTRAC has sent compliance assessment questionnaires to 9,000 real estate brokers and agents, which he said helps them understand their obligations to adhere to anti-money laundering laws.
With files from Farrah Merali