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UBC Applied Course > Anti-Money Laundering > Flashcards

Anti-Money Laundering Flashcards

1
Q

AML stands for

A

Anti-money Laundering

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2
Q

Two pieces of anti-money laundering legislation to know

A

1) Federal legislation
2) Provincial legislation

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3
Q

Federal Legislation

A

Proceeds of Crime, money laundering, and terrorist financing act (PCMLTFA)

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4
Q

PCMLTFA imposes requirements on

A

Financial institutions and other businesses to assist in the fight against money laundering

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5
Q

Canada’s financial intelligence unit

A

FINTRAC

-Is responsible for the detection, prevention, and deterrence of money laundering and the financing of terrorist activities

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6
Q

In BC, Land Owner Transparency Act (LOTA)

A

received royal ascent in May 2019 and was brought into force in November 2020

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7
Q

LOTA requires the disclosure of indirect interest holders in a property

A

Word

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8
Q

PCMLTFA applies to

A

Both real estate brokerages and licensees

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9
Q

FINTRAC’s role

A

-Facilitates the detection and prevention of money laundering and financing of terrorist activities

-Ensures compliance of reporting entities with PCMLTFA

-Outlines who is considered a reporting entity under PCMLTFA and the guidelines around who and what information must be reported

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10
Q

FINTRAC identifies that real estate brokers, sales representatives and real estate developers must comply

A

FINTRAC IS SERIOUS, DAMNNN

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11
Q

PCMLTFA does not apply to

A

Property management

Licensees providing only rental and strata management are exempt

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12
Q

LOTA was introduced in BC to address government concern with money laundering the province

A

The legislation was intended to enhance visibility of the ownership of land in BC to

-Address ‘hidden ownership’
-Crack down on tax fraud
-Close loopholes
-Combat money laundering

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13
Q

LOTA requires individuals and entities who are ‘reporting bodies’ to disclose information about themselves and about

A

Interest holders who indirectly hold an interest in land

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14
Q

LOTA records are

A

Completely separate from the land title office (LTO) and are handled by the administrator of LOTA and stored in a searchable registry called the Land Ownership Transparency Registry (LOTR) developed by the land title and service authority of British Columbia

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15
Q

LOTA itself does not refer to

A

A registry (LOTR) but for ease of reference the information about interest holders is referred to as being in the LOTR

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16
Q

Identify warning signs for money laundering in real estate

A

Identify warning signs for money laundering in real estate

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17
Q

Money laundering is more than just buying a house with cash

A

Even if your brokerage doesn’t accept cash deposits or a property is not paid for in cash, there can still be a risk of money laundering

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18
Q

General warning signs

A

1) Use of corporations, other legal entities, nominees

2) Ownership by foreign persons

3) Purchasers without a mortgage

4) Use of unregulated lenders

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19
Q

Client behaviour warning signs

A

1) Client over-justifies or over explains the purchase

2) Client expressed unusual concerns about government reporting requirements and the real estate anti-money laundering policies

3) Client shows a lack of concern about risks, commissions, or other transactions costs

4) Client is known to have paid large remodeling or home improvement invoices with cash

5) Client arrives at a real estate closing with a significant amount of cash

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20
Q

Unusual transaction warning signs

A

-Client sells or buys property significantly below or above market value

-Client buys property without inspecting it

-Frequent change of ownership of the same property, particularly between related or acquainted parties

-If the property is resold shortly after purchasing at a significantly different price, without corresponding changes to the market values in the same area

-Client buys back a property that they recently sold

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21
Q

Person / entity financial profile warning signs

A

-Client persists in representing their financial situation in a way that is unrealistic or that could not be supported by documents

-Transactions carried out on behalf of minors, incapacitated persons or other persons who appear to lack economic capacity to make such purchases

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22
Q

Use of other parties warning signs

A

-Client does not want to put their name on any documents that would connect them with the property or uses different names on Offers to Purchase, closing documents and deposit receipts

-Client inadequately explains the last-minute substitution of the purchasing party’s name

-Client purchases property in some else name such as an associate or a relative (other than spouse)

-Client pays initial deposit with a cheque from a third party, a spouse, or parent

-Client pays a substantial down payment in cash and balance is financed by an unusual source (Third party or private lender) or offshore bank

-A transaction involving legal entities, when there does not seem to be any relationship between the transaction and the activity carried out by the buying company

-Transaction is completely anonymous - transaction conducted by a lawyer, all deposit cheques drawn on lawyers trust account

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23
Q

Know your client

A

Know your client

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24
Q

PCMLTFA requires licensees to

A

verify their clients identity for certain activities and transactions

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25
Clients can include
Individuals, or entities as corporations, trusts, partnerships, funds, and unincorporated associations or organizations
26
These steps to know your client should be undertaken at the following points
-Receipt of funds at the time the transaction takes place -Collection of client information records at the time the transaction takes place -Submission of large cash transactions at the time the transaction takes place -Identification of suspicious transactions involving an unrepresented party before submitting a suspicious transaction report
27
You must attempt to identify every individual
and ensure that you keep your client information up to date for reporting purposes
28
Politically exposed persons and heads of international organizations
Politically exposed persons and heads of international organizations
29
PEP
Politically exposed person
30
HIO
Head of an international organization
31
Under PCMLTFA, licensees are required to take reasonable measures to determine whether their client is a
politically exposed person, a head of an international organization, or a person related or closely associated with a PEP or HIO
32
When to worry about PEP's and HIO's
-when entering into a business relationship -When conducting periodic monitoring of your business relationships -When a fact is detected about an existing business relationship that indicates a PEP or HIO connection
33
If a licensee determines their client is a PEP, HIO, family member or close associate of a PEP or HIO
They must take reasonable measures to establish their client's source of wealth, and undertake enhanced measures as part of their risk assessment for this high risk client
34
FINTRAC reporting requirements
FINTRAC reporting requirements
35
Suspicious transactions
When you or your brokerage have reasonable grounds to suspect attempted money laundering or terrorist financing in a real estate transaction, a suspicious Transactions Report (STR) must be submitted as soon as practicable
36
Terrorist Property
If you are aware the property you are listing or have listed in the past is owned or controlled by a terrorist organization, you must immediately cease working with the client and submit a report to FINTRAC You must also submit a report to the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS)
37
Large Cash Transactions
Include a transfer of funds over $10,000 CAD A single $10,000 transaction or multiple small transactions that add up to $10,000 in a 24-hour period
38
You must submit a large cash transaction report to FINTRAC within
15 calendar days after the transaction
39
Large cash transaction must be submitted to
FINTRAC electronically
40
Beneficial ownership and ongoing business relationship
Beneficial ownership and ongoing business relationship
41
The names on legal documents in real estate transactions may contain the name of an entity (which includes a corporation, partnership, or a trust
Under PCMLTFA, beneficial owners are the individuals who are trustees, known beneficiaries and settlors of a trust, or who directly or indirectly own 25% or more of a corporation or an entity other than a corporation or trust, such as a partnership
42
Under PCMLTFA, a business relationship is defined as
A relationship established between a reporting entity and a client
43
Ongoing monitoring of a client only ends after the business relationship with them ends
A business relationship ends when a period of at least five years has passed since the last transaction
44
Understand the tools available to assist you with your PCMLTFA obligations
Understand the tools available to assist you with your PCMLTFA obligations
45
Tools to assist in fulfilling your PCMLFTA obligations
Such as LOTR, Land Title Survey Authority (LTSA) and the corporate registry
46
LOTR
Land owner transparency registry provide information about individuals and entities who have a beneficial ownership in property in BC
47
Section 35 of LOTA
Provides for searches by members of the public
48
Land title and survey authority (LTSA)
Operates the BC land title and survey system focusing primarily on three areas 1) land titles 2) land surveys 3) Crown grants
49
Conclusive evidence of ownership (indefeasibility) means that
Except for certain statutory exceptions set out in the land title act, the person who is registered on title as the owner of the land has a legal right to the land, and others searching the title can rely on this
50
The LTO register is operated and administered by the Land Title and Survey authority of BC
The LTSA's electronic search allows registered uses to perform title searches and obtain copies of registered documents and plans
51
Corporate registry
In BC, all registrations for businesses, not for profit societies, and cooperatives are administered through the BC registries department of the provincial government
52
A corporate registry search will provide information confirming
Whether a company exists, the official corporate name as it is registered with the province, and the corporations directors and officers, but not shareholders
53
Some of the information that can be accessed on a corporate registry search includes
-Status -Recognition / incorporation date -Last annual report -Previous company name -Registered office address -Records office address -Names of Directors, officers
54
Early discussions with your client in order to assist with your AML obligations under PCMLTFA
Early discussions with your client in order to assist with your AML obligations under PCMLTFA
55
Under PCMLFTA you must know your client
This means for certain activities and transactions you must -Verify the identity of a client (and if they are a PEP or HIO) -Confirm the existence of entities (corporate, trust, partnership, fund or a unincorporated association or organization) -Determine third party involvement -Conduct ongoing monitoring when a business relationship is formed (including risk based approach) -Report suspicious transactions or transactions linked to terrorist controlled property
56
Considerations when working with consumers
Considerations when working with consumers
57
Seller Clients
As a licensee, you are responsible for identifying clients for: -Receipt of funds -Client information records -Large cash transactions -Suspicious transactions
58
As part of your client identification requirements,
You are responsible for screening and identifying suspicious transactions Including assessing the facts and context surrounding the transaction, identifying red flags, and using a risk-based approach with your client
59
Prior to conducting a search
You should ask the client if they have unregistered interests in land in BC And advise that you will be searching LOTR to verify this information
60
A LOTR name search will provide you with a
A list of matching individuals and the city where they primarily reside As well as the last 3 digits of the PID
61
PID search
Will provide you with the reporting body and the name of the interest holders or settlors linked to the party
62
Buyer Client
Buyer Client
63
As a licensee, you are responsible for identifying for
-Receipt of funds -Client information records -Large cash transactions -Suspicious transactions
64
Unrepresented Parties
Unrepresented Parties
65
If you are representing a seller client
You should perform a LOTR search of the unrepresented buyer prior to your client entering into a purchase agreement
66
If you are representing a buyer in the purchase of property,
You should first perform a title search on the property, and then a LOTR search on both the property and the individual seller prior to writing an offer

UBC Applied Course (5 decks)

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