An internal report from Canada’s financial crimes watchdog found that most banking and real estate companies it audited last year are not following the country’s anti-money laundering laws, sparking calls for greater oversight and higher fines.
The 2022/2023 report, prepared by the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), found that only 106 out of 237 financial institutions complied with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Global News obtained the report under the Access to Information Act. It audited financial services and real-estate companies among other sectors but did not name any individuals or companies.
FinTRAC, which reports to the federal Finance Minister, works to identify and prevent dirty money from entering Canada by analyzing millions of documents submitted by reporting entities like banks, real estate businesses, casinos, and others.
More than 24,000 businesses currently fall under Canada’s anti-money laundering act, according to the agency.
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Financial crime and terrorist financing experts warn that the high failure rates across the finance and real estate sectors have profound consequences: Money laundering can lead to corruption or help criminals use illicit cash to fuel other enterprises, such as fraud or firearms trafficking.
“If crime remains profitable, there will be more crime,” said Matt McGuire, a forensic accountant, noting anywhere from $40 and $130 billion a year is laundered through the Canadian economy.
“In the end, our communities are less safe.”
Here are some of the report’s highlights:
Of the 18 financial entities it examined, including 11 banks, 78 per cent had incomplete or absent anti-money laundering policies and procedures, such as screening for potential criminals or sanctioned persons. (There are roughly 80 regulated banks in Canada, according to the Office of the Superintendent of Financial Institutions.)
Of the 88 money-service businesses examined, roughly 74, or 84 per cent, of them had incomplete or non-existent processes to detect dirty cash and the majority hadn’t completed proper risk assessment to determine whether the client or business had a link to criminal activity.
Of the 71 real estate firms, 61 businesses had incomplete or no anti-money laundering policies and nearly half of the businesses “did not meet client identification requirements.”
Of the 38 securities dealers reviewed 33, or 87 per cent, lacked the proper policies and procedures. Securities dealers, which help people buy stocks or investments, remain “susceptible to securities fraud, including investment misrepresentation and other capital market fraud-related misconduct, such as insider trading,” the agency said.
A smaller number of audits looked at B.C notaries, casinos, dealers in precious metals/stones, and life insurance companies. They found 12 firms were compliant, while 10 required follow up examinations.
The findings show an urgent need for more examinations across all sectors and a significant increase in fines for businesses that aren’t following the laws, experts said.
An image taken from the 2022/2023 report, prepared by the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) for the federal Finance Minister.
(Global News)
Given the negative attention the sector has received over the years, the failing grades from real-estate firms were the most “maddening,” McGuire said.
“This is a sector that [Canada’s] spent the last five to ten years pummeling,” McGuire added. “These failure rates are shocking.
“We’re just not seeing that increase in compliance that we would expect.”
The financial intelligence watchdog is also dealing with the fallout from a cyberattack last month, which has prevented businesses from sending updated transaction information to the agency.
Following the November 2023 FinTRAC report, the agency signalled a more gloves-off approach to those caught breaking the Canada’s anti-money laundering laws by levying some of the largest fines in its history.
In December, the Canadian Imperial Bank of Commerce was fined $1.3 million and Royal Bank of Canada was hit with a $7.4 million penalty over failing to submit suspicious transaction reports.
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CIBC and RBC both said the fines were related to “administrative matters” with the Royal Bank saying, “there is no connection to money laundering or terrorist financing offences.”
FinTRAC told Global News that it’s “actively stepping up its enforcement action,” noting it handed out 12 penalties for violating Canada’s anti-money laundering laws, resulting in an increase of 100% over the past fiscal year 2023/24.
“The total amount of these violations was $26,115,999.50, an increase of more than 2,245% percent in value from last year,” the agency said in a statement.
In the 2022-23 fiscal year, FinTRAC issued six financial penalties, worth a combined $ 1.1 million.
The agency said it has also introduced new compliance measures, including a “Report Card” system, which allows businesses to correct errors related to anti-money laundering compliance as they occur.
Jessica Davis, president of Insight Threat Intelligence, said the fines currently being handed out are a “rounding error” for some of Canada’s largest banks.
“To really make [businesses] take these issues seriously, fines have to be in the tens of millions of dollars,” Davis said. “If they’re not, they really have no incentive to have a robust compliance regime.”
Davis said the results were especially concerning for Canada, which has an upcoming evaluation by the Financial Action Task Force, a global money laundering and terrorist financing watchdog group based in Paris.
“Money laundering and terrorist financing have real costs for us,” Davis said. “They enable organized crime and terrorism.”
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The FATF also periodically issues a report card-style evaluation, indicating whether a country is compliant or non-compliant with measures to combat money laundering and terrorist financing. Countries that receive poor compliance ratings can end up on the “black or grey lists,” which can lead to economic actions from member countries.
Canada’s next evaluation could come as early as December 2025, according to FATF.
Davis said while Canada is far from being grey or blacklisted, companies that don’t follow Canada’s anti-money laundering laws make themselves “vulnerable to being exploited by criminals and terrorists.”
“In the very worst-case scenarios, they are actually helping them,” she said.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
