Radio-Canada, the French language version of the CBC, published an explosive investigative story here on March 26, 2020, as part of its Enquête series, where five realtors in Montréal each independently agreed to take proceeds of crime derived from Colombian narcotics activities from a buyer from Panama with a criminal record, on a hidden camera, and to obfuscate the transaction in the name of the buyer’s girlfriend, a 20-year-old unemployed student.
In the report, available on YouTube (here), Radio-Canada explains that the buyer and the girlfriend are actors. They agreed to wear a hidden camera and microphone and, with the Radio-Canada producer, to meet with realtors in Montréal to view properties that ranged from $1.4 million to $7 million.
One of the actor’s task was to disclose to the realtors that he had a criminal record from narcotics activities in Colombia; that he had quite a lot of money from narcotics activities that was moved from Panama to the Bahamas (both money laundering havens) and kept out of Canada.
After disclosing his narcotics activities in Colombia, keeping money out of Canada and his criminal record, the second task of the actor was to see if the realtors would facilitate him buying millions of dollars in real estate with proceeds of crime without providing any ID, and if they would agree to put the real estate in the name of his unemployed girlfriend.
Amazing reporting and shocking result – every realtor agreed to take proceeds of crime from Panama from a person with a criminal record and who was anonymous, and to keep the buyer’s name off any paperwork, and to register real title in a multi-million dollar property in the name of an unemployed third party.
Some of the exchanges between the realtors and the buyer are as follows (translated by us):
Buyer: “Are you capable of keeping a secret?”
Buyer: “Money is not an object for me, ok? The 1990s were golden years for me. I made lots of money. With, ah, Colombia. You follow?”
Buyer: “I was involved quite a lot in narcotics in the 1990s – I operated in the narcotics world quite a lot and I accumulated quite a lot of money that is, of course, outside of Canada. I was arrested for that. I had to do a bit of time. My money derives from that. I placed it in Panama. Then in the Bahamas.”
Yes, the realtor says “ok” after learning the guy did time for narcotics activities involving Colombia and parked the money outside of Canada.
And there’s more exchanges with other realtors, as follows:
Buyer: “You comprehend well that my money comes from drugs; we understand each other eh? And I don’t want anything to show up in Canada; my name appears nowhere in any transaction.”
Realtor: “That doesn’t bother me at all.”
Buyer: “That does not bother you at all?”
Realtor: (Laughs) “My best friend’s husband does the same thing.”
Buyer: “We understand each other.”
Realtor: “We understand each other.”
In Enquête, the buyer tells realtors that his girlfriend will buy the real estate through a private company and he will not give his ID. They tell him that’s ok.
One realtor promises absolute discretion and says “I’ll even shake on it.” Another realtor suggests that they refrain from using email.
One realtor says that in his eyes (meaning in his view), the buyer was not the buyer; the unemployed girlfriend was.
Another two exchanges between the fictitious narcotics criminal from Panama and realtors were as follows:
Buyer: “If you ask me for ID papers, you won’t get them.”
Buyer: “That’s clear.”
Realtor: “I won’t even ask you then.”
Buyer: “You never saw me.”
Realtor: “That’s it.”
Buyer: “I don’t exist.”
Realtor: “That’s it.”
“I have zero problem with that. Absolutely zero problem. Zero. … no, no, no, no, zero problem with that.”
Two different realtors, after hearing that the money was from narcotics activities from Colombia and that it had been placed in Panama and then in the Bahamas said it was not for them to judge.
Actually, it is for the realtors to judge.
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires that realtors determine if there are reasonable grounds to suspect that a completed or an attempted financial transaction is tied to a predicate offence, which is a subjective determination and hence the realtor must make a judgment call. IOW, the realtor’s job is to judge the transaction’s likelihood to be connected to one of many predicate offences in Canada. There were at least three serious predicate offences staring the realtors in the face – tax evasion, money laundering and drug trafficking.
It was snowing in Montreal during the real estate meetings and thus one exchange ends with the buyer, hitting home that he was in the cocaine business in Colombia, saying:
Buyer: “The snow … I prefer to see it on a table. Not on the asphalt.”
Radio-Canada called the realtors a week later and four of the five denied ever having been involved in a situation where a person sought to launder money through them.
Some realtors said that they believed that their anti-money laundering and Criminal Code of Canada obligations arose only when there was a real estate offer from the buyer.
The realtors, however, had an obligation to obtain, verify and record the identity of the buyer and the third party (the girlfriend) when they became clients, and to report the attempted financial transaction as a suspicious transaction to FINTRAC. There is no law that allows a reporting entity or its employees to obfuscate the parties in a transaction, or ignore third party ID measures. Then there is the issue of knowingly accepting proceeds of crime which is a criminal offence.
The Enquête episode in French is below. It ends with commentary about the role of lawyers who practice in the area of real estate law and mentions the concerns with the exemption of lawyers as reporting entities in Canada and the fact that law enforcement has no visibility over the financial transactions of lawyers who have trust accounts.
You may be wondering “just how bad are things in Canada when it comes to compliance with the proceeds of crime legislation?”
Well, remember the first exchange where the narcotics criminal says “can you keep a secret?” and the realtor says “yes”? The whole of the proceeds of crime legislation in Canada, literally the whole of it, is to not keep a secret.