After last week’s bombshell reports on money laundering in British Columbia, the expert panel that prepared one of them wants the Mortgage Broker Act completely overhauled—a move the Canadian Mortgage Brokers Association-British Columbia supports.
“This is the most critical one, and it’s something we’ve been advocating for: A complete rewrite of the Mortgage Broker Act, which contains lot of gaps and problems,” said CMBA-BC CEO Samantha Gale. “It’s a key recommendation that impacts our sector because the managing broker—what we call the Designated Individual—is not a licensing category. Once you have a licensing category, you can create expectations, standards and due diligence requirements for managing a brokerage. If you had anti-money laundering requirements of a mortgage brokerage, you’d need to fix that problem.”
Canadian Mortgage Brokers Association-British Columbia collaborated with other real estate sector associations to prepare recommendations that they believe would curb the proliferation of dirty money in the province’s real estate market—which the expert panel says resulted in a 5% price hike in 2018 alone.
“We’re working on developing an anti-money laundering course,” said Gale. “Our members can currently do voluntary reporting, but the recommendation is to make it mandatory. That is going to be inevitable. It will happen. We’re getting a course ready for our members to take so they know what to look for.”
The Financial Transactions and Reports Analysis Centre (FINTRAC) doesn’t share information it collects, which confounds the British Columbia Real Estate Association. In April, BCREA recommended to the provincial government that FINTRAC proactively share information with the public.
“Right now, when a real estate office is examined by FINTRAC, the feedback is slow or even non-existent,” said BCREA CEO Darlene Hyde. “Realtors have long been asking FINTRAC to provide immediate, specific suggestions for how they can improve their compliance systems. BCREA hopes the B.C. government can work with FINTRAC to bring about the changes realtors have been asking for.”
Added Gale: “One of big challenges is FINTRAC needs to have more dialogue with the industry about the value of the data. It’s not just a red tape-laden exercise; we understand as an industry why it’s important and the value of us participating in the process.”
In the report prepared by Peter German—a former RCMP deputy commissioner—which identified red flags, there was a glaring misconception, according to Gale, that she says CMBA-BC will soon work with German to rectify.
“The Peter German report makes the point that private lenders are not licensed and they referred to them as ‘unregulated lenders,’ so one thing we’re going to be doing is advising Peter German of the licensing requirements of private lenders,” she said. “Here in B.C., private mortgage lenders are required to be licensed, and so too are their employees. We’ll talk to them about some misconceptions.”
There’s another recommendation in German’s report that CMBA-BC feels is too sweeping and has potential to implicate innocent people.
“There’s a recommendation for something called ‘unexplained wealth order,’ which would potentially enable the government to seize assets from people if they think they have unexplained wealth without any evidence of criminal activity,” said Gale. “We’ll be looking at this particular issue to make sure it doesn’t overstep the individual rights of property owners, because it may.”