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May 21, 2019

Money Laundering: Experience of a Mortgage Broker

 

Our friend and mortgage broker Steve Ennis sent out his newsletter this week, filled with some great information regarding the latest politics surrounding money laundering in BC. You’ve probably heard that last week, BC Premier John Horgan finally announced a public inquiry into money laundering in Vancouver. It’s a hot topic in the news, and Steve gives a great breakdown on how this specifically impacts bankers and mortgage brokers.

If you’re interested in learning a bit more about this specific side of money laundering, and how the province is working to prevent it, read some of the below quotes from his newsletter. For great information and tips on an ongoing basis, sign up for his e-newsletter by emailing:

Below is a breakdown, quoted from Steve’s newsletter, on his experience with Anti-Money Laundering Regulations from the banker and mortgage broker’s perspective.

As a Banker:

  • The Suspicious Transaction Form – As a bank employee if you see anyone performing a transaction “outside of regular banking behavior”, then you are required to fill out this form and send it to the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”). It was understood that they forward it on to the RCMP for further investigation;
  • Large Cash Transaction Form – If a client deposits more than $10,000 in cash in a 24 hour period, you have to fill out this form for FINTRAC. If they deposit $9,999 one day, then $9,999 the next, then $9,999 the next… that would be considered “suspicious” (see form above);
  • No lending institutions would ever finance a Casino, a strip bar, or a white label ATM machine. Why? Because they are considered incredibly high risk for money laundering given the amount of cash involved.  Watch any Hollywood movie made in the 1980s/90s involving a casino and you’ll see what I mean!
  • Annual compliance training - Bank employees have to take online training and pass a test confirming they have the skills to identify and combat money laundering. Your boss would come down on you hard if you went past the deadline without taking the mandatory exam;
  • Anti-Money Laundering (AML) departments. Every bank has a large department dedicated strictly to monitoring bank accounts for any kind of suspicious electronic transactions. Incoming wires from Iran? Any business dealing with foreign exchange? These would get flagged on a regular basis, requiring a significant amount of due diligence to satisfy.

As a broker…

  • I have to fill out consent forms, disclosure forms, and conflict of interest forms on every deal, and have the client sign them before they are considered complete;
  • I have to confirm most down payments have been in a client’s accounts for 90 days before closing;
  • For any cash coming in from abroad, you have to collect bank statements in order to follow it from the source through all intermediary banks into the country and its ultimate destination.

My point with this exercise is that there are many regulatory bodies constantly monitoring any and all transactions that happen in this province, with more regulations being put on regular British Columbians all the time (a great example is the stress-test requirement implemented in January 2018 reducing regular Vancouverites affordability by approximately 20%).  We have been closely monitoring money laundering, yet it has been going on right under our noses? How is this possible? Severe Incompetence, Willful Blindness, or Corruption?

If you want to read more from this newsletter, send him an email to be added to the list , or you can follow him on instagram @ennis_steve to get more info.

Thanks for reading- let us know if you have any hot topics or questions you would like us to tackle on our blog!

 

 

Jordan Cahill

Jordan Cahill is a Chartered Accountant (CA) and Chartered Professional Accountant (CPA) with a bachelor degree in business from Simon Fraser University. He articled at a national CA firm in Vancouver,BC and previously held a position at the Canada Revenue Agency as a business auditor.