Does Canada’s real estate sector risk being a hotbed for crime? + MORE Sep 16th

OTTAWA – An in-depth review of Canada’s anti-money-laundering efforts has uncovered serious concerns that organized crime is using the country’s hot real estate sector to illegally funnel cash.
The report from the Paris-based Financial Action Task Force makes special note of real estate as an area of the economy with a high risk of illicit activity, one of a few weak spots in what the report calls a comprehensive federal regime to combat money laundering and terrorist financing.
The charitable and life insurance industries are also identified in the report as sectors at risk of providing financial help to terrorists and criminals.
Of particular concern are real estate schemes in which a foreign or domestic criminal provides cash to a local buyer, or more sophisticated schemes where loans and mortgages are combined with lawyers’ trust accounts to move money around quietly.
The Canada Revenue Agency is investigating questionable transactions in the Vancouver real estate market, part of a wider study the federal government is doing into ever-rising housing prices there and in Toronto…

Despite headlines of slow growth, job losses and market volatility, Canadians are more comfortable with their financial investments and the current economic environment, except when it comes to real estate and investing in a home. 
According to the Manulife Investor Sentiment Index, now in its sixteenth year of tracking investors’ view of  asset classes, an increasing number of Canadians don’t think now is a good time to invest in real estate. This reluctance to sink money into real estate includes purchasing a home, paying off a mortgage and investing in renovations.

While 80% said owning a home was their primary goal, only 25% of respondents who currently rent said they plan to buy a home in the next 12 months.
“There’s a mindset that it’s harder and hard to buy into some markets in Canada,” says Kevin Headland, senior investment strategist, Manulife Investments. “In the hotter markets it’s a seller’s market and I think what we’re seeing is a bit of buyer exhaustion…

BERLIN – Shares in Deutsche Bank AG have plunged after the company said the U.S. Department of Justice is seeking $14 billion to settle civil claims over its handing of residential mortgage-backed securities.
Shares of Germany’s biggest bank were down 7.8 per cent at 12.20 euros ($13.59) in early Frankfurt trading on Friday.
The bank said early Friday that the Justice Department had proposed a $14 billion settlement and asked for a counterproposal. It said it had “no intent to settle these potential civil claims anywhere near the number cited.”
Deutsche Bank is in the middle of a painful transition as it tries to meet tougher regulatory requirements, cut costs and settle multiple legal investigations.
The post Shares of Deutsche Bank plunge amid US legal dispute appeared first on Canadian Business – Your Source For Business News.

TORONTO – Scotiabank is defending its income verification practices in light of a report that says Canadian banks allow foreign borrowers to qualify for mortgages without having to prove the source of their income.
A Globe and Mail report Wednesday said that Scotiabank’s (TSX:BNS) internal guidelines don’t require its loan officers to verify foreign clients’ income sources if the down payment on a property is at least 50 per cent.
Scotiabank spokeswoman Diane Flanagan said the bank regularly makes exceptions to accommodate clients who can’t provide standard documentation, such as Canadian tax returns and pay stubs, to verify their income.
Certain types of borrowers — such as non-residents, self-employed people and new Canadians — simply don’t have those documents, Flanagan said.
“We look at exceptions on a regular basis, because there aren’t one-size-fits-all policies for everybody,” Flanagan said.
The bank still verifies the source of the money being used to fund the purchase and that the borrower is able to service the mortgage, she said…

Deutsche Bank AG says it does not intend to pay $14 billion to settle civil claims with the U.S. Department of Justice for its handling of residential mortgage-backed securities and related transactions.
The bank confirmed Friday in a statement that the Justice Department had proposed a settlement of $14 billion and asked the German bank to make a counter proposal.
It described the proposed amount as an “opening position” put forward by the Justice Department in negotiations that were just beginning.
Deutsche Bank is among many financial institutions investigated over dealings in shoddy mortgages in the run-up to the 2008 crisis that led millions of Americans to lose their jobs and sometimes their homes.
The government has accused the banks of misleading investors about the quality of their loans.
The post Deutsche Bank: No plan to pay $14B Justice Dept. settlement appeared first on Canadian Business – Your Source For Business News.