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3. Acting with honesty, competence and dignity

The REBA provides that a licensee must act with honesty, loyalty and competence.1 In addition, he must carry out his activities with diligence and integrity. He must not commit any act that is derogatory to the honour and dignity of the profession.2

The licensee must behave in accordance with these ethical obligations in the fight against money laundering.

The licensee must have the necessary skills and knowledge to be able to identify money laundering schemes. For example:

  • The use of a nominee to conceal the source and ownership of funds. The "nominee" can be a friend, associate, or a paid person who does not attract attention. He carries out the purchase or sale of a property on behalf of the money launderer
  • Deposits of money made into a trust account by one person and subsequent withdrawals for the benefit of another person
  • The "smurfing" which consists in depositing cash amounts below the mandatory reporting threshold by many inconspicuous individuals in order to "anonymize" the transaction
  • Transferring the proceeds of crime abroad for conversion into foreign currency and then reintegrating them into the financial system
  • The cash purchase of high-value goods  such as jewelry, cars, boats, or real estate registered in the name of a friend or relative to be resold to launder the proceeds
  • Using exchange bureaus  to purchase foreign currency that can then be transferred to offshore bank accounts around the world
  • Gambling in casinos where chips are purchased with cash and returned to the casino counter to be redeemed in the form of a cheque
  • Etc.

The licensee must also be able to recognize certain types of behaviour that may arouse money laundering suspicions in a real estate transaction. For example:

  • The client arrives at a real estate transaction closing with a significant amount of cash
  • The client purchases property in the name of a nominee such as an associate or a relative (other than a spouse)
  • The client does not want to put his or her name on any document that would connect him or her with the property, or uses different names on promises to purchase, closing documents and deposit receipts
  • The client inadequately explains the last-minute substitution of the purchasing party’s name
  • The client negotiates a purchase for market value or above asking price, but records a lower value on documents, paying the difference under the table
  • The client sells a property below market value with an additional under the table payment
  • The client pays initial deposit with a cheque from a third party, other than a spouse or a parent
  • The client makes a substantial down payment in cash and the balance is financed by an unusual source or offshore bank
  • The client purchases personal use property under corporate veil when this type of transaction is inconsistent with the ordinary business practice of the client
  • The amount that the prospective buyer offers for the property does not correspond to his profile (e.g., his age and occupation)

The licensee must be very careful to identify fraud and money laundering "indicators."  FINTRAC has created a list of indicators to help licensees recognize, assess and report suspicious real estate-related financial transactions.

He must also be proactive by asking questions to find out about the nature and legality of transactions. The licensee must be thorough and diligent in his record keeping and review of transaction documents.

The licensee's lax behaviour, complacency and willful blindness to money laundering indicators are violations of his ethical obligations.

It is not necessary to have conclusive evidence that a licensee has committed a criminal offence or a violation of the PCMLTFA to determine that he or she is guilty of an ethical offence. These are separate offences with different burdens of proof. Before the Discipline Committee, the syndic will have to show, based on a balance of probabilities (50% + 1), that the licensee was lax, complacent, or wilfully blind by ignoring the indicators that he is required to detect. He will not have to prove that the licensee actively participated in money laundering activities in violation of the Criminal Code or the PCMLTFA.

Furthermore, violating the PCMLTFA may constitute an ethical offence in that it may itself be an act derogatory to the honour and dignity of the profession for example. A licensee could be found guilty of such an offence for agreeing, for instance, to sell a property below market value, knowing that an additional amount would be paid in cash. A licensee could also be guilty of failing in his duty to carry out his activities diligently by not asking his client why the buyer's name was changed at the last minute, of being complacent or wilfully blind.

Last updated on: December 14, 2021
Numéro d'article: 208774