Money launderers get the gangster treatment

Canadian authorities creative in shutting down financial crimes

A few weeks ago, I warned readers about the money laundering avalanche that could be headed straight for our northern neighbors, Canada. In an effort to stave off this avalanche, the Canadian government has taken impressive proactive steps as of late. In the first example, we see an unlikely pairing of agencies to curb money laundering in casinos; in the second, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) takes on the heavy role of bringing the Canadian real estate market up to speed on anti-money laundering regulations and compliance.

An unlikely pair

When you think about anti-money laundering efforts in casinos you probably don’t assume that a gang unit will come to the rescue, but that’s exactly what is happening today in British Columbia. The newly formed Joint Illegal Investigation Team, which will be housed within the Combined Forces Special Enforcement Unit (CFSEU-BC), combines an anti-gang agency with the Ministry of Finance’s Gaming Policy and Enforcement Branch. As a team, its mission is to investigate groups that use gambling facilities to legalize financial proceeds from criminal activity.

The task force creation is a key part of Phase 3 of the BC government’s anti-money laundering strategy, which launched in 2011. This action seems overdue considering that money laundering activity in casinos is reaching a boiling point. One chart shared by the task force indicated that the total amount of suspicious cash transactions since April of last year totaled $119.1 million.

The task force’s initial strategies to curb to money laundering through casinos include:

1. Restricting patrons from exchanging small bills for large currency

2. Temporary bans at establishments for those being investigated

3. Promote the use of cash alternatives at gambling facilities

Records request reveals FINTRAC schooling real estate agents

No doubt in response to earlier accusations of money laundering in Canadian real estate circles, FINTRAC is investing serious time educating realtors. As a result of its scrutiny, Canadian real estate agents are working hard to better understand compliance requirements on reporting suspicious transactions.

How real of a problem is real estate money laundering in Canada? In the past year alone, 55 Vancouver-based real estate firms were investigated for poor anti-money laundering safeguards. Darren Gibb, the communications manager with FINTRAC, stated in an interview with Canada’s Real Estate Magazine:

“The international community and Government of Canada have acknowledged the real estate industry is vulnerable to money laundering,” says Gibb. “Money laundering is like the flow of water; it takes the path of least resistance. And, quite frankly, we’re seeing how real estate is being used to launder money.”

In documents obtained by The Canadian Press, the Canadian Real Estate Association (CREA) officials acknowledged that compliance in the real estate sector was low. In those same documents, CREA officials appeared to be “peppering FINTRAC with questions about how the [real estate money laundering] rules should be interpreted,” according to a Huffington Post article.

The records show FINTRAC devoting significant energy into the real estate association including a review the association’s online training, giving feedback on CREA’s AML manual and providing guidance on interpreting policies. Hopefully Canada’s FINTRAC will set helpful standards that other countries can follow, as Canada isn’t the only one struggling with money laundering in real estate.

Now, will these two efforts work? It’s too soon to know, but I’ll be keeping an eye on the results from the joint task force. I hope it proves effective and sets an example for more cross-agency collaboration, especially in regard to casinos. The same goes for real estate, it is new territory that both the US and Canada (and the rest of the world for that matter) are just starting to explore and understand as havens of money laundering.