It’s been almost three weeks since the Board implemented a ban on cash deposits of any kind in a real estate transaction. If you missed the announcement, here’s what you need to know.
Effective September 1 this year, the Fraser Valley Real Estate Board joined other real estate boards in BC to ban all cash deposits in real estate transactions. The move came about when BCREA and its member boards, decided to take action following scathing reports on money laundering activities in BC’s real estate market. Note that the ban on cash deposits applies to only the purchase of a home or property, not property management services.
The new policy is now included in our FVREB Member Policy and Regulations Manual, available on REALTOR Link® > About > Board Governance.
Defining cash
To sum up, the new regulation states that a brokerage cannot deposit cash of any amount from a client, or on behalf of a client, if even any portion of a deposit is offered in cash.
We define cash as bills and coins in the legal tender of Canada or another country, but exclude cheques, electronic fund transfers or money orders, which are acceptable for deposits.*
If you’ve never had a client offer cash as part of a deposit, you may think this regulation won’t have much of an impact. As outlined in the RECBC’s Professional Standards Manual under section 2. (f) Deposits, (iii) Cash Deposits, cash deposits are rare in sales transactions, but if they do happen, “can pose problems for licensees.”
‘RECBC has seen situations where licensees have deposited cash deposits into their own personal accounts, then transferred these funds into their brokerage’s trust account or had a bank draft payable to the brokerage drawn on these funds. While the intention may have been to reduce the risk of loss or theft, this is not an acceptable practice. The licensee’s account is not a trust account and is therefore not protected from attachment by creditors.’
Every brokerage and REALTOR® is required by law to be in full compliance of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations, in accordance with guidelines provided by FINTRAC whose criminal penalties include huge fines and/or imprisonment.
*As of September 1, 2019, there is no mention of bitcoin or other digital currencies under the definition of cash in our FVREB regulation, although it’s possible new legislation regarding digital currencies will be enacted by the federal government of Canada at some point in the future.