Most real estate firms fail to meet anti-money laundering standards, audit says
Most banking and real estate companies audited last year violated anti-money laundering laws, according to the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC).
An internal report from Canada's financial watchdog revealed that most audited institutions did not comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The report estimated that between $40 billion and $130 billion is laundered through the Canadian economy annually.
The real estate sector showed concerning levels of non-compliance. Sixty-one of 71 firms audited lacked adequate anti-money laundering policies. Alarmingly, nearly half of these firms failed to meet basic client identification requirements, a fundamental component of any anti-money laundering regime.
Overall, only 106 of 237 financial institutions reviewed met the required standards.
“If crime remains profitable, there will be more crime,” forensic accountant Matt McGuire told Global News. He pointed out that the profitability of illicit activities is bolstered by weak enforcement and regulatory oversight.
The non-compliance spans across several sectors, from banks to real estate firms, and includes entities like casinos and money-service businesses:
- 78% of 18 financial entities, including 11 banks, had incomplete or absent anti-money laundering policies and procedures.
- 84% of 88 money-service businesses had incomplete or non-existent processes to detect dirty cash.
- 61 of 71 real estate firms had incomplete or no anti-money laundering policies, and nearly half didn't meet client identification requirements.
- 87% of 38 securities dealers lacked proper policies and procedures, leaving them "susceptible to securities fraud."
Read more: OSFI intensifies monitoring of money laundering in Canadian finance
FinTRAC’s findings have led to calls for more stringent regulatory measures and higher penalties for non-compliance to ensure financial institutions and real estate firms meet their obligations under Canadian law.
The agency, which operates under the federal finance minister, is tasked with analyzing millions of documents annually to detect and deter the infiltration of illicit funds.
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