INITIAL ASSESSMENT BY SECUREFACT ADVISORY SERVICES TEAM
QUESTIONS? Contact us to talk to a member of Securefact's Advisory Team.
Ontario Government measures to cool down the speculation in the real estate sector are consistent with FINTRAC requirements and the recent Federal Budget announcement on beneficial ownership transparency.
Today the Ontario government revealed long awaited measures to cool down the housing market. Several measures have been suggested including the introduction of a tax on foreign buyers and certain rent control measures.
However, from an anti-money laundering perspective it is indeed encouraging to note that the Ontario government will be collecting from home buyers more information on completion of land registration documents. These requirements will take effect from Monday, April 24, 2017.
For example, home buyers will be required to provide information on:
- Where they currently live
- Their citizenship and permanent residency status
- Intention of living in a home as their principle residence or as an investment and,
- If property is bought by a corporation, who owns or controls the corporation
These measures support the FINTRAC guidelines for real estate firms to ensure adequate due diligence on their customers is performed as part of their anti-money laundering risk management requirements.
The guidelines issued by FINTRAC have been reiterated in their real estate sector operational brief issued on November 14, 2016.
Furthermore, the new measure for the determination of the beneficial owners of entities purchasing real estate is consistent with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The Proceeds of Crime (Money Laundering) Act (PCMLTFA). The law specifies the type of information that must be collected:
a) Corporations: The names of all directors of the corporation and the names and addresses of all persons who own or control, directly or indirectly, 25 per cent or more of the shares of the corporation;
(b) Trusts: The names and addresses of all trustees and all known beneficiaries and settlors of the trust
In summary, information establishing the ownership, control and structure of the entity must be obtained in sufficient detail for regulatory scrutiny.
Indeed, the Federal government announced in the Federal Budget on March 22, 2017 to have a national strategy for improving the availability of beneficial ownership information.
We hope that these measures will not only help Canadians with affordable housing, but will also deter real estate speculators and money launderers from tainting the industry.
QUESTIONS? Contact us to talk to a member of Securefact's Advisory Team.
- Re/Max Integra CEO Pamela Alexander discusses the Fair Housing Plan [CTV News]
Ontario’s rent and housing reform: 16 big changes explained
[Globe and Mail]
— Securefact (@Securefact) April 20, 2017
This guidance provides information about certain amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (the Regulations) which were made in June 2016. Please note that guidance relating to client identification and Politically Exposed Persons (PEP) and Heads of International Organizations (HIO) is already published on FINTRAC's guidance webpage and are therefore not covered in this document. Some of the regulatory changes came into force in June 2016, while others will come into force in June 2017.
Fintrac to work with Finance Canada to review the Proceeds of Crime (Money Laundering) and Terrorist Financing Act legislation in relation to their penalty program. They will also examine their administrative monetary penalty policies to ensure, among other things, that they strike an appropriate balance between the need for transparency and the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) today announced the assessment of a $7 million civil money penalty (CMP) against Merchants Bank of California of Carson, CA for willful violations of several provisions of the Bank Secrecy Act (BSA). The Office of the Comptroller of the Currency (OCC), the primary federal regulator of Merchants, has identified deficiencies in the Bank’s practices that resulted in violations of previous consent orders entered into by Merchants, as well as other violations. The OCC simultaneously assessed a $1 million CMP against Merchants for these violations.
WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) today announced the renewal of existing Geographic Targeting Orders (GTO) that temporarily require U.S. title insurance companies to identify the natural persons behind shell companies used to pay “all cash” for high-end residential real estate in six major metropolitan areas. FinCEN has found that about 30 percent of the transactions covered by the GTOs involve a beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report. This corroborates FinCEN’s concerns about the use of shell companies to buy luxury real estate in “all-cash” transactions.
Washington, D.C. – The Financial Crimes Enforcement Network (FinCEN) has assessed a $184 million civil money penalty today against Western Union Financial Services, Inc. (WUFSI). WUFSI consented to FinCEN’s determination that prior to 2012, WUFSI willfully violated the Bank Secrecy Act’s anti-money laundering (AML) requirements by failing to implement and maintain an effective, risk-based AML program and by failing to file timely suspicious activity reports (SARs). FinCEN’s penalty is in conjunction with actions by the U.S. Department of Justice (DOJ) and the U.S. Federal Trade Commission (FTC).
On December 20, 2016, the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC") released new guidelines in respect of politically exposed persons ("PEPs") and heads of international organizations ("HIOs"). A separate guideline was released for each of financial entities, securities dealers, life insurance companies, agents and brokers and money services businesses and will be effective June 17, 2017.
Below are the URL's to each separate guideline.
This Operational Alert provides specific guidance to Canadian reporting entities about named foreign financial entities through which the Canadian financial system could be exposed to Daesh-related terrorist financing. These foreign entities should be considered high-risk by reporting entities. These businesses should file suspicious transaction reports or attempted suspicious transaction reports where entities set out in Appendix A are party to transactions that reporting entities process and where they have reasonable grounds to suspect it relates to terrorism financing.
Amendments to the Business Corporations Act (Ontario) (the “OBCA”), the Corporations Act (Ontario) (the “Corporations Act”) and the Not-for-Profit Corporations Act, 2010 (Ontario) (the “NFP Act”) (collectively, the “Amendments”) now require all Ontario corporations to keep a record of their ownership interests in land in Ontario. The Amendments are a result of the passing by the Ontario government of the Budget Measures Act, 2015 (Bill 144) (the “BMA”), which received Royal Assent on December 10, 2015. The BMA, which amends multiple statutes and enacts five new statutes including the Forfeited Corporate Property Act, 2015 (Ontario) (the “FCPA”), came into force on December 10, 2016.
Source: Wildeboer Dellelce
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Credit Suisse Securities (USA) LLC $16.5 million for anti-money laundering (AML), supervision and other violations.
FINRA found that Credit Suisse’s suspicious activity monitoring program was deficient in two respects. First, Credit Suisse primarily relied on its registered representatives to identify and escalate potentially suspicious trading, including in microcap stock transactions. In practice, however, high-risk activity was not always escalated and investigated, as required. Second, the firm’s automated surveillance system to monitor for potentially suspicious money movements was not properly implemented. A significant portion of the data feeds into the system were missing information or had other issues that compromised the system’s effectiveness. The firm also chose not to utilize certain available scenarios designed to identify common suspicious patterns and activities, and it failed to adequately investigate activity identified by the scenarios that the firm did utilize.