Finance Minister Chrystia Freeland issued an order on Wednesday instructing private mortgage lenders to report any suspicious cash transactions..According to Blacklock’s Reporter, Freeland's department warned in a regulatory notice the Canadian real estate market was at an “increased risk of exploitation” by criminals..“This will help to address the increased risk of exploitation of Canada’s real estate market by criminals, which can negatively impact housing affordability across the country,” the finance department wrote in a Regulatory Impact Analysis Statement..Freeland issued new regulations to take effect October 11, 2024, compelling all private mortgage lenders to keep records on clients and report cash transactions over $100,000 under threat of $500,000 fines. Banks, credit unions and loan and trust companies already comply with similar regulations under the Proceeds of Crime and Terrorist Financing Act..“Recent years have seen a growth in mortgages issued by businesses not regulated under the Act,” said the Analysis Statement. .“Given the lack of regulation and the equivalent services and products, these unregulated mortgage lenders can be highly vulnerable.”.“Increased risk of exploitation of Canada’s real estate market by criminals can have some impact on housing affordability across the country,” wrote the department. .“For example, criminals could purchase properties for values that are significantly higher than market value to launder greater amounts of illicit funds, which could bring up the average price of homes. Criminals could also purchase multiple properties and leave them vacant, limiting the supply of housing and impacting housing affordability.”.New regulations follow the 2021 Commons Finance committee testimony by real estate brokers that “dirty money” targeted the industry. .“Money laundering is a multi-billion dollar problem in our housing market,” testified Brian Santos, then-chair of the Ontario Real Estate Association..“It contributes to crowding out hardworking families looking to achieve their dream of one day owning a home,” said Santos, a Waterloo, ON, broker. .“Ontario realtors do not want to see a single dollar of dirty money competing against hardworking young families in our housing market.”.In 2021, the government changed the regulations so real estate agents must verify the names and details of people involved in deals over $100,000..“Lack of reporting in real estate has been a major gap in my opinion,” James Cohen, executive director of the advocacy group Transparency International Canada, said in an interview at the time. Lack of rules saw “some realtors look the other way” in dealing with suspicious cash customers, he said..“We examined a decade’s worth of real estate transactions in the Greater Toronto Area and red-flagged $25 billion,” said Cohen. .Cohen stated the suspicious activities involved mortgages approved by unregulated private lenders and $9.8 billion in cash sales.
Finance Minister Chrystia Freeland issued an order on Wednesday instructing private mortgage lenders to report any suspicious cash transactions..According to Blacklock’s Reporter, Freeland's department warned in a regulatory notice the Canadian real estate market was at an “increased risk of exploitation” by criminals..“This will help to address the increased risk of exploitation of Canada’s real estate market by criminals, which can negatively impact housing affordability across the country,” the finance department wrote in a Regulatory Impact Analysis Statement..Freeland issued new regulations to take effect October 11, 2024, compelling all private mortgage lenders to keep records on clients and report cash transactions over $100,000 under threat of $500,000 fines. Banks, credit unions and loan and trust companies already comply with similar regulations under the Proceeds of Crime and Terrorist Financing Act..“Recent years have seen a growth in mortgages issued by businesses not regulated under the Act,” said the Analysis Statement. .“Given the lack of regulation and the equivalent services and products, these unregulated mortgage lenders can be highly vulnerable.”.“Increased risk of exploitation of Canada’s real estate market by criminals can have some impact on housing affordability across the country,” wrote the department. .“For example, criminals could purchase properties for values that are significantly higher than market value to launder greater amounts of illicit funds, which could bring up the average price of homes. Criminals could also purchase multiple properties and leave them vacant, limiting the supply of housing and impacting housing affordability.”.New regulations follow the 2021 Commons Finance committee testimony by real estate brokers that “dirty money” targeted the industry. .“Money laundering is a multi-billion dollar problem in our housing market,” testified Brian Santos, then-chair of the Ontario Real Estate Association..“It contributes to crowding out hardworking families looking to achieve their dream of one day owning a home,” said Santos, a Waterloo, ON, broker. .“Ontario realtors do not want to see a single dollar of dirty money competing against hardworking young families in our housing market.”.In 2021, the government changed the regulations so real estate agents must verify the names and details of people involved in deals over $100,000..“Lack of reporting in real estate has been a major gap in my opinion,” James Cohen, executive director of the advocacy group Transparency International Canada, said in an interview at the time. Lack of rules saw “some realtors look the other way” in dealing with suspicious cash customers, he said..“We examined a decade’s worth of real estate transactions in the Greater Toronto Area and red-flagged $25 billion,” said Cohen. .Cohen stated the suspicious activities involved mortgages approved by unregulated private lenders and $9.8 billion in cash sales.
