Fiona Anderson
Sun
B.C. drug dealers and other criminals will have a tougher time disposing of their ill-gotten gains as new federal anti-money-laundering legislation cracks down on real estate purchases and currency exchange operations.
The new law, which will be in force Monday, also adds other rules aimed at hindering the disposal of large amounts of cash.
Realtors will have to take more steps to ensure they know who they are dealing with. They will also need to hang on to information identifying their clients for five years.
“We know organized crime buys houses and they buy houses on a regular basis,” said Ken Fraser, executive director of investigations with the Financial Institutions Commission of B.C.
Some purchases are made to carry out more illegal activity, such as marijuana-growing operations and amphetamine labs, Fraser said. Others are aimed at laundering the money to turn proceeds of crime into a legitimate asset.
To date, those purchases have often been made using fake identification, Fraser said.
“It’s not that onerous to assume another identity and purchase property,” he said.
In many cases the person listed on the title doesn’t even know his name has been used, he added.
Under the new rules, realtors have “to ensure the person they are dealing with is the person whose ID is produced,” Fraser said.
Last November, police in B.C. froze $6 million worth of real estate they claim was owned by Yong Long Ye, the alleged mastermind behind a drug syndicate charged with importing thousands of kilograms of cocaine from the United States and supplying local methamphetamine and ecstasy labs with ingredients. At the time of Ye’s arrest, police declared they had “chopped the head off the snake.”
Most of the properties were not in Ye’s name, and police would not say how they had traced the homes back to Ye.
Under the new rules, tracing ownership should be easier, said Peter Lamey, a spokesman for the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the organization that collects reports on suspicious transactions.
Real estate is especially vulnerable to money laundering, Lamey said. And requiring realtors to identify their clients will help deter that.
Currency exchanges and money transfer operations — but not cheque cashing companies — are also targeted in the new legislation. Starting Monday, money-services businesses will have to be registered with FINTRAC and will have to make sure that people depositing cash have a legitimate business to support the deposits, said Kim Marsh, managing director of the Vancouver office of IPSA International, Inc., a company that helps others comply with anti-money laundering legislation.
In the past, a person could deposit cash using fake ID and by saying he had a car wash, Marsh said. Now money-services businesses will have to be satisfied that the story, and the ID, are real.
The point is to prevent people from depositing large amounts of cash from crime, he said. And in B.C. that means money from drug trafficking and growing operations.
“Grow-ops generate huge amounts of cash,” Marsh said. “And [the criminals] have to get that cash into the system. If they can get it into an MSB [money-services business] who can get it into a bank account, they’re halfway there.”
Marsh advises companies to ask for lots of documents. A particularly useful one to request is a credit report “because that’s a hard thing to generate,” he said.
“If you don’t have a credit history that’s a huge red flag.”
People will complain, and some will ignore the law, Marsh said.
“And then we’ll be reading about them in the paper some time down the road.”
The new rules — which have been adopted to bring Canada in line with international standards set by the Financial Action Task Force created by the Group of Seven industrialized countries in the early 1990s — also now require companies to report attempted suspicious transactions in which an individual aborts a transaction that would otherwise have to be reported.
