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Canadian Institute of Mortgage Brokers and Lenders Submission in Response to Finance Canada's Enhancing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime consultation:
September 30, 2005
Ms. Diane Lafleur
Director, Financial Sector Division
Department of Finance
140 O'Connor Street
Dear Ms. Lafleur,
Re: Enhancing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime
The Canadian Institute of Mortgage Brokers and Lenders (CIMBL) welcomes the opportunity to provide comment on the consultation paper.
CIMBL represents 7,500 members across the country. We have members in all ten provinces and the Northwest Territories. CIMBL includes members from all facets of the mortgage industry including lenders, brokers, and insurance providers. As you know, the mortgage brokerage industry in Canada is regulated provincially, while the lender industry is regulated federally. That is why CIMBL is a strong proponent of harmonization of rules and standards across the country.
Currently, CIMBL lender members must comply with federal legislation including reporting requirements to FINTRAC.
CIMBL strongly supports efforts to reduce and or eliminate money laundering and terrorist financing activity in Canada. Such activity is not only illegal, but costs mortgage providers be they lenders or brokers. Policies and administrative structures that seek to stop such activity are therefore important and ones that CIMBL supports. Some specific comments:
Section One "Strengthening Canada's Due Diligence Standards"
The federal government would be interested to know that CIMBL has undertaken many initiatives to address fraud avoidance and increase mortgage professionalism. Measures include the introduction of an Accredited Mortgage Professional program, or AMP. In order to attain their AMP designation, members must take several courses including one on fraud avoidance which covers anti-money laundering. In addition, CIMBL has adopted an "Origination Standards for Fraud Avoidance" guideline for members that cover many of the disclosure issues raised in the discussion paper. This guideline addresses the type of information to be included in a mortgage loan application, standards for identification of a mortgage loan applicant, required credit checks and various employment and income documents. This initiative undertaken by CIMBL is a part of ongoing discussions with both OSFI and FINTRAC.
In Section 1.3 of the discussion paper reference is made to "reasonable measures to obtain name, address ..." CIMBL believes that its anti-fraud guideline goes well beyond what could be considered reasonable measures, although the government should define what it means by such a phrase.
Section 1.5, on politically exposed persons (PEPs) may create administrative difficulties. The section, it appears, seeks to expand the definition to include both foreign and domestic nationals. There are many individuals in Canada involved in political and/or government activities. The government should clearly define what it means by PEPs in a domestic situation.
Section 2 "Closing the Gap"
CIMBL supports extending reporting provisions beyond real estate brokers and agents to developers. This would capture the significant amount of real estate sales activity that is undertaken directly by developers or builders.
Finally, CIMBL believes that regulations must be practical. We have undertaken to develop a fraud avoidance agreement in consultation with both lenders and brokers. It is not a quick process and education is key. The federal government has an important role to play in publicizing not only any new changes, but what they mean. It may also require the phasing in of any new requirements to ensure that proper education efforts are undertaken. CIMBL would be pleased to assist in this effort.
Senior Director of Government Relations and Communications