Inside the Cullen Commission
The Society of Notaries Public of BC (The “Society”) was one of 16 organizations granted “standing” to become formal participants in the Commission of Inquiry Into Money Laundering in British Columbia (the “Commission”).
I was honoured to be counsel for The Society throughout the Inquiry. We presented at the initial public meeting in Vancouver before making formal opening and closing presentations to the hearings.
Before the start of the hearings, we provided Commission staff with information on the details of real estate transactions in BC and the involvement of BC Notaries Public in real estate transactions. During the hearings, we had the right to cross-examine witnesses and review all presented evidence.
The hearings took place over 130 days involving 199 witnesses and 1060 exhibits. The transcripts and exhibit materials are still available on the Commission website and total over 450 Gigabytes of text as well as video recordings of all the hearings. The final commission report is an 832,071- word, 1800-page tome. I recommend reading at least the Executive Summary and the consolidated list of recommendations.
Our involvement was critical as the role of Notaries as legal service providers is unique to this province. Consequently, we could not assume that the many national and international experts and authorities consulted by the Commission would be familiar with our BC real estate system and the practices of BC Notaries and lawyers as they carry out transactions here.
As a result, the Commission needed to consider the specifics of how transactions are completed in BC and how funds flow among buyers, sellers, real estate firms, lenders, Notaries, and lawyers. John Mayr (Society CEO) and Marny Morin (statutory Secretary of The Society) appeared as witnesses and provided valuable evidence on those points.
It is common in BC for Notaries and lawyers to be involved in a transaction, acting for the different parties. That includes representing sellers, buyers, and mortgage lenders. Though the Courts have found that the standard of professional care is the same for BC Notaries and lawyers, there are significant differences that go to the central concerns of the Commission. Most important, BC Notaries are the only legal service providers in Canada subject to the requirements of the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”).
The Commission’s mandate was to enquire, which inevitably meant matters would become apparent that pushed the boundaries of the initial “terms of reference.” Commissioner Cullen had to come to grips with many difficult-to-reconcile issues throughout the hearings.
The complexities faced by the Commission included the following:
- A local (BC) mandate looking at global issues in an increasingly borderless world
- The limits of Provincial authority and the many national and federally regulated agencies
- Considering our Provincial systems, for example, our BC Land and Corporate Registries, in light of evidence regarding quite different governmental and business practices in other jurisdictions
- Some pressure to come up with a simple, satisfactory explanation to opaque and complex issues
- The frequently made suggestion that “the answer” lies in the improved capture and analysis of enormous amounts of transparently available information vs. the cost, complexity, and privacy implications of such an effort
- The enormous difficulty our justice system has had prosecuting and punishing money launderers given the legal, structural, and financial barriers faced by many dedicated system participants dealing with criminals without those constraints
The report makes 101 recommendations that now need to be considered by the provincial government. That will take some time as the recommendations have considerable legislative, regulatory, and budget implications.
On September 28, 2022, David Eby KC, the former Attorney General, released his housing platform that gives a view into his priorities for implementing the Cullen recommendations.
Regardless of the timetable for that work, there have already been significant and useful outcomes from the work of the Commission. The level of coordination and cooperation among agencies has improved significantly. The Society has been pleased to be an active participant along with 36 other agencies in the Counter Illicit Finance Alliance of British Columbia ( “CIFA”), an “RCMP-led, financial information sharing partnership, to bring together public and private organizations to combat money laundering and other financial crime.” In addition, The Society is a regular participant in the meetings of the BC Interagency Fraud Group.
The Society has continued to work even more closely with FINTRAC. It has formalized that relationship in a “Memorandum of Understanding” to facilitate and coordinate our mutual responsibility for the monitoring and reporting required of BC Notaries Public.
It is clear from the Cullen hearings and reports that new legal frameworks are needed to appropriately balance privacy and human rights concerns with investigative and prosecutorial effectiveness based on enhanced and effective coordination and sharing of information. The Society will be actively involved as those discussions proceed over the next few years.
During the hearings, the new Land Owner Transparency Act came into force and all BC Notaries became familiar with the necessary filings into the Land Owner Transparency Registry (“LOTR”). Though the primary intent of the LOTR is to enhance AML capabilities, it has had the very beneficial unintended effect of requiring property owners to more fully consider how they wish to hold title and interests in land. The discussions will undoubtedly avoid future legal disputes, reduce friction between and among family members, and provide clarity regarding tax obligations. Not surprisingly, LOTR and other new real estate transaction filing requirements have added complexity and cost to all real estate transactions.
Commissioner Cullen notes at page 2 of his Report that “Money laundering is also an affront to law-abiding citizens who earn their money honestly and pay their fair share of the costs of living in a community. These costs are being borne by all system participants.” That is undoubtedly the case. The challenge will be ensuring that efforts to increase anti-money laundering effectiveness do not unduly burden the everyday transactions of those concerned citizens.
Ron Usher is the General Counsel for The Society of Notaries Public of British Columbia and a Commissioned Notary Public.
Posted in Justice