On September 1 this year, the Fraser Valley Real Estate Board (FVREB) will join other real estate Boards to prohibit cash deposits in real estate transactions. The FVREB is introducing the policy as a fourth regulation in its Member Policy and Regulations Manual.
The regulation will not permit a brokerage to deposit cash of any amount from a client, or on behalf of a client, if even any portion of a deposit is paid in cash.
Money laundering in real estate
The move has come following scathing reports of money laundering activities in BC’s real estate market and increasing pressure on our industry to help put a stop to it.
The FVREB regulation defines cash as bills and coins in the legal tender of Canada or another country, but does not include cheques, electronic fund transfers or money orders, the latter which are acceptable for deposits. *
The ban on cash deposits does not apply to property management services.
Financial reporting
BCREA has emphasized that every brokerage and REALTOR® is responsible to be aware of, and ensure full compliance with applicable obligations under 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.
- Failure to report suspicious transactions: up to $2 million and/or 5 years imprisonment.
- Failure to report a large cash transaction or an electronic funds transfer: up to $500,000 for the first offence, $1 million for subsequent offences.
- Failure to meet record keeping requirements: up to $500,000 and/or 5 years imprisonment.
- Failure to provide assistance or provide information during compliance examination: up to $500,000 and/or 5 years imprisonment.
- Disclosing the fact that a suspicious transaction report was made, or disclosing the contents of such a report, with the intent to prejudice a criminal investigation: up to 2 years imprisonment.
The regulation will appear in the manual as written below:
Regulation #4 being a regulation concerning the prohibition of accepting cash deposits which is applicable to all members of the Fraser Valley Real Estate Board here.
1. Cash means legal tender of Canada or another jurisdiction (i.e. bills and coins) and does not include cheques, electronic fund transfers or money orders.
2. A brokerage must not accept a deposit of any amount from or on behalf of a client if the deposit (or any portion thereof) is paid in cash.
3. Each brokerage and each REALTOR® is responsible to be aware of, and ensure full compliance with applicable obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations, in accordance with guidelines provided by FINTRAC.
*As of this date, there is no mention of bitcoin or other digital currencies under the definition of cash in this 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.