Mortgage Broker

Fall 2019

Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.

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CMB MAGAZINE fall 2019 | 11 legalease BACKGROUND You are a mortgage broker assisting a client who purchases and sells real estate frequently, funds large private mortgages, drives a fancy car, goes on vacation oen and lives the high life. You wonder how she funds the lifestyle. She doesn't have a job, as far as you know. Your client indicates she has investments that have paid off rather well. You notice she oen pays for expensive things in cash. What obligation do you have to ensure your client is not using you to launder money? By being involved in the process, are you a money launderer? MONEY LAUNDERING IN CONTEXT Money laundering is the process of transforming "dirty money" into, in perception, "clean money." It creates a legitimate explanation for proceeds obtained from illegitimate activity, hiding the true origin and owner of the proceeds. e battle against money laundering is related to the Criminal Code prohibition against possessing stolen property. e government has over time expanded legislation against activities related to stolen activity, both as to increasing the scope of prohibited activities and decreasing thresholds and safeguards in enforcing the laws. is expansion puts workers in the real estate and financial sectors, including mortgage brokers, at greater risk of inadvertently violating the law and of having property forfeited to the Crown. How far is too far for the government to go in fighting money laundering? Do the limitations on rights and freedoms of law- abiding citizens outweigh the worthwhile goal? Are available remedies against wrongdoers disproportionate to the wrong? Is taking the medicine worse than bearing the illness? Intelligent people will disagree as to the appropriateness of various measures, however there is little room for disagreement that the expansion is in fact occurring. THE EXPANSION Possession of Stolen Property Possession of stolen property has always been an offence in Canada. e targeted property was the property obtained from the commission of the offence, for example the goods that were stolen in a burglary. Proceeds of Crime e Criminal Code expands the type of property it is wrong to possess to include proceeds of crime. Proceeds of crime are property the person knew was obtained or derived directly or indirectly from the commission of an indictable offence. (Criminal Code, section 354.1) For our purposes, it is enough to understand that indictable offences are generally the more serious offences. Forfeiture Forfeiture laws allow the government to dispossess wrongdoers of their ill-gotten possessions. ey entitle the government to confiscate property, without paying compensation. e Criminal Code allows forfeiture when: n on a balance of probabilities (that is, more likely than not) the property is related to the offence for which there has been a conviction, or n beyond a reasonable doubt the property is a proceed of crime, without regard as to whether there has been a conviction for the crime. (Criminal Code, section 462.37) Other federal statutes allow forfeiture in similar circumstances (Controlled Drugs and Substances Act for example). e provinces have expanded forfeiture considerably. All provinces, except Prince Edward Island and Newfoundland and Labrador, have enacted civil forfeiture statutes; none of the territories has done so. e provincial laws make it easier for the government to obtain forfeiture by: n applying to property obtained not only by crime but by unlawful activity (the provinces use various terms to describe such activity); n requiring proof only on a balance of probabilities; n not requiring a conviction, trial, or even charge related to the conduct from which the proceeds are claimed to have been obtained (New Brunswick law allows forfeiture to occur even if the person has been acquitted); n streamlining the process and thereby avoiding many of the protections provided in the criminal process; and n not being concerned with whether the value of the property to be forfeited is In their quest to choke off money laundering, governments are raising the standard for vigilance on the part of professionals BY RAY BASI, LL.B., STAFF EDUCATION AND POLICY REVIEW DON'T PLAY IN THE DIRT

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