Realtors are committed to addressing the serious social and economic issue of money laundering in real estate
Much has been reported about money laundering in B.C. casinos, the luxury car sector and - in recent days - real estate. These are issues that concern British Columbian and rightly so. Affordability is an issue for most of us and billions in illegal funds filtering into B.C. distorts local markets while enriching the criminal element.
We've all seen the reports of criminals carrying bags of money into casinos or buying luxury cars with stacks of neatly bundled bills. If real estate is the third part of this story, many may wonder just who exactly are B.C. realtors and how is all this money getting into the housing sector?
It's important to understand the difference between the real-estate sector as opposed to casinos and car sales. First and foremost, criminals don't show up at open houses carrying the purchase price of homes in cash. In reality, a realtor rarely deals in cash.
Realtors connect buyers with sellers. There's a great meme that says, first realtors are matchmakers, matching the right buyer with the right home. After that, they're like wedding planners - handling all the details around the sales contract and deposits to make their clients' dreams a reality.
Realtors, who build their businesses on reputation, have no interest in working with criminals, says Darlene Hyde, CEO of the B.C. Real Estate Association.
Once the sales contract is signed and the deposit paid, the bulk of a realtor's work is done. From there the transactegarding money laundering from realtors. They have a critical role as the first point of contact in a transaction. It's not likely that criminals who are as part of a sophisticated laundering operation show up at open houses with a business card that says: "I am a criminal."
But there are questions that must be asked and answered as part of a realtor's due diligence at the beginning of a transaction. Realtors are professionally bound to report suspicious client behaviour to Fintrac, the federal body responsible for facilitating the detection, prevention and deterrence of money laundering and the financing of terrorist activities.
A month ago, the B.C. Real Estate Association, in partnership with the B.C. Notaries Association, Canadian Mortgage Brokers Association - B.C., the Appraisal Institute of Canada - B.C. Association and the Real Estate Board of Greater Vancouver, issued a joint anti-money laundering statement.
It included a best practice of accepting only funds verified through financial institutions, as well as increased education to help detect criminal intent. This is an ongoing challenge, as realtors are not trained investigators nor financial analysts. Still, we recognize the need for realtors to do their part and we're taking steps to address this.
We also called for increased information sharing among Fintrac and other regulators such as the B.C. Securities Commission, Financial Institutions Commission and others. We need a co-ordinated and efficient enforcement system.
Money laundering is a major Canadian issue. It's larger than any one province, government or organization. Only by working smarter together and with ongoing information sharing will we succeed.
To be clear, realtors have no interest in working with criminals. Real estate is a business built on reputation, referrals and relationships. You see the faces of realtors at bus stops, as sponsors of local sport teams and at community events. They are an integral part of the communities in which they work, live and raise their own families. A thriving community leads to a thriving real-estate sector. Realtors are committed to addressing this serious social and economic issue and they want all players in the sector to do so as well.
-- Darlene Hyde is CEO of the B.C. Real Estate Association