Canada’s newfound reputation as a money laundering hub hasn’t motivated much action. FINTRAC, Canada’s anti-money laundering watchdog, announced only administrative monetary penalties for real estate firms in 2024. All of the firms were located in Toronto and Vancouver, and appear to be entirely over minor compliance issues. Considering the agency took up to 3 years to fine real estate firms over minor filing infractions, the agency doesn’t seem to be motivated to actually crack down.
Administrative Monetary Penalties
FINTRAC is Canada’s anti-money laundering intelligence agency. Its primary duty is overseeing compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCTFA), to lower the risks of money laundering. To comply with its obligations to the G7’s Financial Action Task Force (FATF), Canada has reluctantly added real estate firms under the scope of the agency.
The agency publishes a list of public notices of the administrative monetary penalties (AMPs) that it hands out. They only published 3 AMPs for real estate firms last year, with enforcement dates in 2024. Two of those firms were from the Greater Toronto Area, and one in Greater Vancouver. Those instances were:
JLL, (Toronto, ON)
Global commercial real estate behemoth JLL was hit with an administrative monetary penalty of $107.8k on March 13, 2024 over six violations. Four of the violations are over inadequate documenting procedures for employees to follow, and a review of those procedures. The other two were more specific, though they didn’t identify any actual issues:
- 40 instances of inadequate records relating to clients and receipt of funds.
- 14 instances of inadequate records related to identity of clients
The notice was just a few weeks ago and the action was dated 2024, but the issue is long in the past. FINTRAC discovered the issues during a routine compliance audit back in 2022.
1000085532 Ontario Inc., d/b Right At Home Realty (Toronto, ON)
1000085532 Ontario Inc., “also operating as Right At Home Realty Inc. and Right at home Realty,” paid a fine of $58k for three violations on June 27, 2024. All three were related to inadequate documentation of procedure and review of that documentation. The fines were the result of a routine audit in 2022, and no specific transactions were identified as an issue.
Masters Realty (2000) Ltd. (West Vancouver, BC)
Masters of Realty (2000) Ltd in West Vancouver was hit with a fine of $83.7k for 5 violations on January 8, 2024. The fines were the result of a routine compliance audit done in 2021 (!), with 3 of the cited offenses related to inadequate procedures. The remaining two cited specific incidents:
- 3 out of the 25 transactions reviewed had issues with identification—the principal business was missing on one, and the other was “vaguely and insufficiently detailed.”
- 3 incidents where they found inadequate documentation of the person who provided funds.
It’s fairly obvious that FINTRAC is only generating minimal data points to show it has an office. The agency spent 3 years on one firm, and still failed to indicate anything more significant than a lack of bureaucratic procedures. However, that’s how Canada’s anti-money laundering watchdog is designed at a high level.
A clear example is the TD compliance scandal. Regulators in both Canada and the US found issues with the bank’s compliance procedures. In Canada, the bank was hit with a $9.19 million fine for failing to do adequate AML checks in hundreds of specific examples. It was the largest fine ever for the regulator, but the focus stops at the organization level. Following the suspicious funds and determining if it was an innocent filing mistake or outright negligence isn’t an issue they’re interested in figuring out.
TD Bank, the bank’s American subsidiary, also had compliance issues come to light last year. They followed the money and found those issues resulted in money laundering networks washing $670 million through the bank. Consequently, they were hit with the largest fine of its type in US banking history—a whopping US$3 billion. American regulators also imposed a cap on assets, intentionally limiting its ability to grow south of the border.
Despite the clear lack of motivation, expect FINTRAC to show improvements when it comes to suspicious transaction reports. It will be primarily due to parts of the filing system being offline for a good chunk of the year. However, throttling the ability to file suspicious transactions doesn’t actually resolve any real issues.