An assessment from the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) showed that many real estate companies are failing to comply with anti-money laundering rules.
Citing the FinTRAC 2017-2018 assessment, the Organized Crime and Corruption Reporting Project (OCCRP) said that the real estate sector has yet to fully understand how money launderers can take advantage of the sector.
While the real estate sector showed improved anti-money laundering compliance since the previous audit, the FinTRAC report acknowledged that it "still has one of the lowest reporting levels."
Of the 500 companies audited by FinTRAC, 172 are real estate groups, which include developers, brokers, and sales representatives. The assessment found that agents were not equipped with the proper training to identify potential money laundering.
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OCCRP said real estate-linked money laundering cases were common in cities like Toronto, Vancouver, and Montreal. This could be one of the reasons why the prices of properties in these cities increased significantly.
A 2019 report by an expert panel in British Columbia found that of the $7bn that was laundered in the province in 2018, $5bn went through real estate. This contributed to the 5% spike in property prices in BC.
As part of the efforts to combat dirty money in the province, the Real Estate Council of BC (RECBC) has launched a mandatory course on anti-money laundering for local agents.
"Protecting consumers so that they can feel confident about their real estate transaction is our first priority, and that's why we've decided to make this new course on anti-money laundering mandatory for all real estate professionals," RECBC CEO Erin Seeley said.