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Fall 2016 Volume 25 Number 3
Published Quarterly by The Society of Notaries Public of British Columbia
©iStockphoto.com/TheaDesigns
Inside: FRAUD!
Publications Mail Agreement: 40010827
When Reading the PDF Online
click on an article or page number
P U B L I S H E D BY T H E S O C I E T Y O F N OTA R I E S P U B L I C O F B C
HISTORY OF NOTARIES Steering Clear of Fraud
BC Notaries: When Buying a Used Car 32
Celebrating Our 90th Year of Incorporation 6 Drew Jackson
Editor’s 33
FEATURES: FRAUD! BE A SAVVY SENIOR!
Fraud Protection Strategies for Seniors 34
KEYNOTE Krista James
FYI 7 Protecting Your Data and Your Client’s Data
Val Wilson through Better Computer Security 36
THE CEO/SECRETARY OF THE SOCIETY John Macnaughton
Fraud is Nothing New 8 TORRENS & TECHNOLOGY
Wayne Braid An Update from the Front Lines! 38
THE PRESIDENT OF THE SOCIETY Rudy Nielsen
We Can All Be Victims of Fraud 9 Fraud and the Ownership of Land 40
Tammy Morin Nakashima Chuck Salmon
On Intellectual Fraud 10 Who Are You? 42
Nigel Atkin Filip de Sagher
Where There is Fraud, Business to Business 45, 48
There is Always Money Laundering! 12
Sandra Gail Walker
Deterring Money Laundering
and Terrorist Financing 17
Julie Rozon
FIDUCIARY RESPONSIBILITY
AND REGULATORY OBLIGATIONS The Scrivener: What’s in a Name? 5
Protecting Money from Theft 18 EDUCATION
Brian Trainor Planning, Money, and CSIL 46
It Takes a Savvy Senior to Avoid Financial Fraud 21 Lisa Berry Vander Heide
Barb Kirby Tracy Skates to Bronze! 48
THE HOTEL SEMINAR SCAM Fall Conference 2016 49
The “Confidence Game” Updated for Our Times 22 Marny Morin
Ron Usher Services a BC Notary Can Provide 58
Examples of Some of the Slang
Associated with Confidence Games 23
Don’t Flip for “Free” Real Estate
Investment Seminars 24
NO FRAUD REQUIRED
What Counts as a Fraudulent Conveyance
in British Columbia? 25
Kaila Dotten Building Better Communities, One Grant at a Time
NEWS FROM THE BETTER BUSINESS BUREAU The Board of Governors 53
Scams Never Seem to Go Away 28
SPOTLIGHT ON GOOD WORKS
Evan Kelly
British Columbia:
Consumers Aren’t the Only Victims of Scams. In the Midst of a Rental Housing Crisis 54
Businesses are Targets, Too. 31 Andrew Sakamoto
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
4
THE MiX
BEAUTY FROM THE EDGE
Beauty is Where You Find It 56
Marylee Stephenson Published by
ORIGINAL RECIPE The Society of Notaries Public
Pistachio Crusted Halibut 59 of British Columbia
LETTERS 59
FAMILY LAW
Divorcing Peacefully . . . It Is Possible! 60 Editor-in-Chief Val Wilson
Zahra Jimale Legal Editors Wayne Braid, Ken Sherk
ASTTBC At a Glance 62 Administration Amber Rooke
ALLIED PROFESSIONALS Courier Lightspeed Courier & Logistics
Committed to Making the World a Better Place 62 Photographer Gary Wildman
John Leech, AScT, CAE, Chief Executive Director
STRATAS
Builder’s Lien Holdbacks for Strata Corporations 65 The Scrivener
Elaine McCormack email: scrivener@society.notaries.bc.ca
STRATAS / SMALL CLAIMS DISPUTES website: www.notaries.bc.ca/scrivener
Early Intake at the Civil Resolution Tribunal 68
Richard Rogers
The Society of Notaries Public of BC
AIC-BC
604 681-4516
Welcome, Christina Dhesi 69
TAXES To send photographs
The Bank of Mom and Pop to The Scrivener, please see
Buying the First Home 70
Andréa Agnoloni the Editor's column on page 33.
WILLS AND ESTATES
The Bank of Mom and Dad Is Doomed 72 All rights reserved. Contents may not be
Trevor Todd reprinted or reproduced without written
permission from the publisher.
PERSONALITY
Is Authenticity Authentic? 74 This journal is a forum for discussion,
Rhonda Latreille not a medium of official pronouncement.
TECHNOLOGY The Society does not, in any sense, endorse
Fun Before the Holidays 76 or accept responsibility for opinions
Akash Sablok expressed by contributors.
ABCLS
The Future of Land Surveying in BC 77
EVENTS AND HONOURS
PEOPLE 78
Where in the World Has The Scrivener Been? 78
CANADA POST: PUBLICATIONS MAIL
AGREEMENT No. 40010827
The Scrivener: What’s in a Name? Postage Paid at Vancouver, BC
“A professional penman, a copyist, a scribe . . . a Notary.” Thus the
Oxford English Dictionary describes a Scrivener, the craftsman charged RETURN UNDELIVERABLE CANADIAN
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Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 5
HISTORY OF NOTARIES
BC Notaries:
Celebrating Our 90th Year of Incorporation
T
here have been Notaries he was elected Social Credit MLA Society would discontinue their
for Vancouver Centre, soon serving automatic protest against all Notarial
in British Columbia since as Chair of the important Private Bill applications and The Society agreed
Colonial times. Committee and becoming Deputy not to increase its membership.
Speaker of the House.
On August 12, 1926, The Notaries When Alex Matthew died in 1969,
Public Association of British Columbia the Directors chose as provisional
held its first annual meeting and on Secretary Bernard Hoeter, PhD, a
November 2, 1926, The Society of On August 12, 1926, German-born multilingual academic,
former Director, and practising Notary.
Notaries Public of British Columbia The Notaries Public
was officially registered in Victoria. The Directors appointed him pro
Association of British tem until they could find a proper
Eades Ward was the first full-time
Columbia held its first replacement. Dr. Hoeter remained
Secretary of the new Society. His Secretary until his retirement in
handwritten ledger entries show the annual meeting…
1986. An Honourary Life Member,
membership fee from 1926 to 1932 he continued practising until 1993,
was $3 per year. In 1933, during the returning his Seal to The Society rather
Great Depression, the fee was reduced than selling it.
to $2. Ward’s priority was to build the
membership of The Society. His 1927 Stan Nicol, a former Society President
membership register showed 626 (1983 to 1984) took over from Hoeter.
Notaries enrolled. They practised in For details, please see Scrivener Vol. 9
118 BC communities—in places long No. 2, July 2000. www.notaries.bc.ca
forgotten such as Anyox, Beaverdell,
Jubilee, Nahun, and Renata—but BC Notary G. W. Wayne Braid is
the bulk of the members worked the current Chief Executive Officer
in Vancouver. Ward’s also focused on and Secretary of The Society of
educating the members, arranging for Notaries Public of BC. His diverse
sessions on law, often with solicitors responsibilities include guiding
as lecturers, and had textbooks printed Society Secretaries Stan Nicol, The Society and its member Notaries
Bernard Hoeter, and Wayne Braid in 2002 to fully embrace the wonders of
and distributed. Ward retired in 1939
after 13 years of service. technology. ProSuite—The Society’s
Under populist Premier W. A. C. own legal services software—was
He was followed by H. E. Warburton, Bennett, the political scene in Victoria created through his vision. Wayne
President of The Society from 1935 to had changed and Alex Matthew had also serves as Executive Officer
1939. He led The Society through the considerable political clout. Matthew of The Notary Foundation.
World War II years, retiring in 1953. moved the office of The Society
That same year, Alexander Matthew, downtown “to a more reputable ACHIEVEMENTS
a Director of The Society, was district,” he said.
WARD
appointed Secretary by his fellow To prevent a clash with the now
Directors, becoming a Managing- (politically) strong Notaries, the Law 1926 – 1939
Director and ruling The Society in Society, under its Treasurer Elmore Actively promoted the incorporation
true CEO style. This strong-willed Meredith, and Matthew came to an of The Society and started the first
Scotsman and successful insurance understanding. In 1955, they shook office of The Society and, together
agent had come to Canada in 1908 hands on an unwritten accord later with President Loutet, succeeded
and moved to Vancouver in 1910, to be known as the “Gentlemen’s in giving early Notaries respectability
becoming a Notary in 1917. In 1953 Agreement” that provided the Law and basic security.
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
6 TABLE OF CONTENTS
WARBURTON KEYNOTE
1940 – 1952
Started the education program
for Notarial Candidates and arranged Val Wilson
for lectures and had textbooks printed Editor-in-Chief
www.wildmanphotography.com
and distributed.
MATTHEW
1953 – 1969
Through his political clout and
FYI
finesse, he reached the “Gentlemen’s
Agreement” of 1955. The Law Society
stopped automatically challenging all
Notarial applications. Plagiarism
HOETER With today’s technology and
1969 – 1986 software, words copied verbatim
His background and negotiating from published works—for example,
skills made him an acceptable plagiarized text inserted into a postgrad
partner to the Law Society and to thesis—are much easier to expose.
the BC Government. He steered the The consequences can be grim. Photo credit: Wallace Studios
Notaries Amendment Act of 1981
A business student caught using
It Was Joyce!
that eliminated the “need” clause and The Summer 2016 issue of
an author’s words as his own was forced
opened the future for The Society. The Scrivener (on page 21) featured
to withdraw from the school and was
He instilled an exceptional esprit de an article by retired BC Notary Joyce
banned for a year. He was fortunate they
corps into the membership. Members Helweg. The only clues about who
let him return at all. He was disgraced
no longer considered themselves real wrote the piece are her photo and the
and lost a year of postgraduate studies.
estate or insurance brokers but proud, fact that her name is part of her URL.
There was no refund of the tuition he
full-time Notaries. www.joycehelwegauthor.com
had paid. He said the mistake cost
NICOL him about $20,000 cash. The year’s We would like to acknowledge
1986 – 2000 delay in being able to start earning Joyce as the writer. She is
a living amounted to a lot more currently working on her third book
He computerized the administration
money than that. of nonfiction! s
of The Society, established the Notary
Foundation, and materially extended Many people think it is just fine
to copy images—pictures/photos/
the education program for candidates
drawings—from the Internet. Some
Take The Scrivener Survey
and existing Notaries, as well.
He worked tirelessly to promote the sites say you may use their material Dear Readers:
Representation Agreement Act, which but those sites may or may not own BC Notaries are always looking
came into force February 28, 2000. those images or have the legal right for ways to better serve our
to use them. Alert: Copyright law public. We would appreciate
BRAID is alive and well on the Internet. your feedback on The Scrivener
2000 – Present Jennifer Dove ably addressed magazine. Please complete the
Wayne Braid has literally taken “Beware Using Other People’s short survey below by Tuesday,
The Society into the 21st century Pictures” in the Fall 2013 issue November 1.
through leading-edge technology and of The Scrivener on page 70. Here is the link to the
an increased focus on education, survey. https://goo.gl/forms/
insurance, public and government Archives: www.notaries.bc.ca/scrivener
vShOuRsqK4xmvH5j1
relations, and many other areas of One lucky respondent will
business for The Society and its be chosen at random to receive
members. He is CEO and Secretary Why We Say “BC Notaries”
a $250.00 Visa gift card. We’ll
of The Society and Executive Officer A BC Notary Public can provide contact the winner by email on
of the Notary Foundation of BC. Friday, November 4.
significantly more legal services than
Through his leadership and direction,
Notaries in other provinces, Québec Thank you for your input!
The Foundation has broadened the
scope and delivery of services and excepted. Please see page 58 for a list Wayne Braid, CEO/Secretary
funding to legal support groups across of the ways a BC Notary can assist you. The Society of Notaries Public of BC
British Columbia. s
Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 7
THE CEO/SECRETARY
OF THE SOCIETY
Wayne Braid
www.wildmanphotography.com
Fraud is Nothing New
©iStockphoto.com/Steven Wynn
S
electing a theme for each The messages are becoming more It is 1537, a time of revolution
and more sophisticated, so we need that sees the greatest changes in
issue of The Scrivener to be more and more discerning. England. Henry VIII has thrown out the
is always a challenge We receive email that looks exactly
Catholic Church and the Pope and he
has proclaimed himself head of the
and a decision not made lightly. like a message from our bank or our Church of England.
hydro company or one of our online
Our Fraud theme was no vendor accounts. As King of England, Henry VIII
exception. Although Fraud is a is fraudulently taking over the
negative subject, we wanted to provide monasteries and the churches.
timely and educational information Fraudulent people Matthew Shardlake, a lawyer by
to our readers. and schemes of all profession and a man with a physical
disability, is hired by Cromwell to carry
As we developed this issue, descriptions permeate out some of the dissolution. During
and as the articles and ideas came our daily life. his work, Shardlake discovers many
in, I am satisfied that we have done fraudulent schemes, many rigged
that. Our editor Val Wilson does an trials, and many deeds conducted
exceptional job of choosing articles Once you look at the origin of
in a fraudulent and deceitful manner.
that reflect what is happening in our the email, however, you immediately
communities and farther afield. recognize it is not from iTunes or I highly recommend the series
Apple or Amazon; it is an attempt by if you like novels with a high degree
Fraud is a word that immediately the fraudulent sender to have you click of intrigue and that are based on
triggers our inner fears and wariness. on the link (that of course takes you historical events with accurate
Fraudulent people and schemes of all to their site) and enter your account descriptions of life during the period.
descriptions permeate our daily life. information. Once you do that, they
My conclusion is that fraud in its
have your credit card information and
Every day we must be careful, myriad forms has always been with us
away they go!
whether we are making a major and is simply a fact of life. Others will
purchase or a small one. Our minds Each day, newspapers and try to take advantage of us in some way.
immediately ask, Am I being taken? television reports are full of the latest
scam or fraud that has been inflicted on We need to be ever watchful;
Is this the right price to pay? Does
some unsuspecting consumer or group. we also need to teach our children
this item really do all the things the
and the vulnerable people in our lives
salesperson has told me or what the It’s a difficult task to always be to be aware of what lurks out there.
advertising says it will do? watchful, to always be on the lookout
for the person who might be attempting BC Notaries conduct many
We have good reason to be transactions in our province that
suspect and cautious. I am certain to get at your money or assets.
require us to make certain we
your email inbox and trash bin The interesting thing about
determine the authenticity of the
look like mine—with a multitude fraud and dishonest behaviour is
documents before us and the true
of fraudulent enquiries and offers. that it has always been with us.
identity of the individuals before us.
I receive far more of those unsolicited I am currently reading a series
messages than I do regular email— of books by C. J. Sansom and his Our BC Notaries are trained
everything from selling fake watches Shardlake series—historical crime professionals who have the skills and
to offers of a sexual nature to free novels that take us into the darkness the abilities to carry out the role of
money and free travel. of Tudor life in the 1500s. gatekeepers here in British Columbia. s
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
8 TABLE OF CONTENTS
THE PRESIDENT
OF THE SOCIETY
Tammy Morin Nakashima
We Can All Be
Victims of Fraud
F
raud is both confounding but she was away and had asked the We are apprised of technologies
nephew to sell the property for her. for the transfer of funds and the risks
and frightening. of using various techniques.
The nephew’s best intentions
How can intelligent people be to help his vacationing aunt We have protocols in place
duped? That’s the confounding part. notwithstanding, signing the to ensure the appropriate steps
documents as if he were his aunt are followed when real estate is
The frightening part is that it does
would have constituted fraud. being sold or refinanced and money
happen, notwithstanding education
You cannot sign the name of another changes hands. People are asked
and modern technology.
person on a legal document. to seek independent legal advice to
Of utmost importance is a protect the integrity of a transaction
watchful eye and the realization that and ensure that a fraud—a duping—
regardless of the fact that YOU would How can intelligent is not being committed.
never commit a fraud, there are people people be duped? Fraud and trust are at the opposite
out there who would.
That’s the confounding part. end of the spectrum. My advice?
Sometimes a person’s intent may Educate yourself about electronic
be innocent—innocuous, neutral, safeguards, computer virus protection,
well-meaning. Legal authorization such as a and insurance options to protect your
Power of Attorney is needed to manage portfolio.
I recall a file long ago where I was
affairs lawfully for another individual.
instructed in the usual manner through My advice to people like my client
the real estate office to act for the In the above case, I would not accept
the travelling aunt and her well-
seller of a property. We phoned the the man’s signature on the house
meaning nephew? Before travelling
seller’s telephone number and asked transaction. An extension was obtained
or entering into a contract of sale,
for the seller by name—a name that and the aunt returned to handle her
arrange a personal consultation with
was not gender-specific; we wanted own sale.
your BC Notary.
to verify that our Notary office was True fraudsters are experts in their
Help prevent fraud by appointing
indeed to act for that transaction. field. They devise means to hack into
someone you trust under a Power
The person who answered the your cyber wallet. They steal credit of Attorney to lawfully sign on your
phone identified himself as the property cards and bank cards, jeopardizing behalf for your house sale, your
owner and confirmed that our office was your finances. insurance, or your tax return, in case
to do the conveyance for the sale. Because the reality of fraud exists, you become ill, detained, or otherwise
We duly prepared the documents it is important to identify the safety unable to handle your affairs.
and made an appointment for the measures you can implement to avoid Designate a decision-maker
seller to come to the Notary office becoming a victim. Working with through your Representation
to sign the papers. accredited professionals is a good start. Agreement so you have the right
To follow the usual security BC Notaries are educated about person protecting your best interests.
protocols, at our meeting I asked to the current risks and the techniques In that legal document, you can
see the seller’s identification. The ID fraudsters use. We follow FINTRAC specify the way you wish your health
presented did not match the name compliance rules as a precautionary care to be maintained and managed.
of the registered owner of the property. means of protecting our clients’ And when you suspect you are
When I probed, the man before me identity in their real estate and at risk, seek advice from your Trusted
explained that his aunt was the owner financial transactions. Professional. s
Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 9
FRAUD
Nigel Atkin
On Intellectual Fraud
F
raud has many roots, on all continents in three broad
…a consumptive diet categories—mobsters, warlords,
but one of them stems of propaganda, distraction, and oligarchs.
from weakened minds and inconsistent information Those enemies of democracy
nurtured by the fraudulent use can damage public intellect have many long-term goals for eroding
strong democratic states that are duty
of information. and erode a nation’s bound to control and regulate their
democracy. actions.
Just as high levels of lead can
damage the intellectual development The distortion and erosion is in their
of children, a consumptive diet But, while pursuing the ideals of interests in the same way that terror and
of propaganda, distraction, and democracy has given tangible hope chaos are in the interests of ideologues
inconsistent information can damage to millions more people, the chaotic who are challenged by the “order” hard
public intellect and erode a nation’s transitions from former totalitarian won, leading to the obedience to the
democracy. systems are not always immediately rule and the spirit of law.
Buying-in to fraudulent facts, free of fraud and corruption. Democracy Erodes
data, and reason at any level has dire And, at the same time, To understand what institutions can
consequences. in established, apparently stable be eroded, consider some of the more
democracies, people empowered by the common ideals of democracy.
Taking Fraud to Extremes
evolving possibilities of communication • Government is based on the
It’s not difficult to imagine the extreme technology can also threaten our consent of the governed and the
manifestations of fraud. highest ideals of government. ultimate sovereignty in government
Internationally, there are many As Oligarchs Rise belongs to the people. People
examples where small groups of elect government representatives.
powerful people, usually men, govern With ever-expanding global
opportunities for accumulating wealth • While the majority rules, minorities
societies through conspiracy, crime,
through unbridled capitalism and have rights and human rights are
violence, and the manipulative devices
other means, some individuals have guaranteed.
of propaganda.
embraced greed to secure power and • There is individual equality before
In recent history, following the profit by exploiting new markets in the Courts. That is sacrosanct
decline of Communism and the home countries and abroad. and along with due process must
breakup of its totalitarian flagship,
Without the institutions and the be delivered by justices, again
the Soviet Union, and many of its
individuals to deliver the many aspects following the rule of law.
surrogates ruled by dictators, the
concept and practice of democracy of democracy, metaphorical weeds • There are constitutional limits
has actually expanded in places such will grow. on government that conform
as Poland and Ukraine and in many Within traditional and new to governance initiated by
other countries—in Africa, Asia, and “freedoms,” some old and new pluralistic social, political,
elsewhere. enemies of democracy have arisen and economic forces.
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
10 TABLE OF CONTENTS“There’s a sucker
born every minute.”
• Democracy is often visually When fewer people participate
depicted as being held up in democracy, vested interests—
by four pillars—the judiciary, Name Calling many of them corrupt—benefit.
the executive, the legislative, Commonly known as talking trash, It is our duty to stay awake
and the media. simplistically denigrating or belittling to the accuracy of the information
• Democracy is predicated a rival we consume. Society swims in a sea
on an informed electorate. Testimonials of propaganda. In that rising deluge,
Concepts that we promote— A respected and otherwise famous by consuming vast quantities of
critical thinking, transparency, and an person associated with the product deliberate distraction, public ability
informed electorate—are antithesis to or person (The opposite would be guilt to discern is quickly eroding.
those who thrive in an anti-intellectual by association.) As well, when the values associated
theatre of fraud. with greed are sold to people and
Plain Folks become dominant in a society, rights
Aspects of Propaganda
Appealing to normal folk, the regular and regulations governed through
History is unfortunately replete with people with common values of family, democratic institutions corrode,
examples of political campaigns that health, and service thereby making the road ahead easier
used some and all of the techniques
Bandwagon for mobsters, warlords, and oligarchs.
of propaganda to not so jokingly
They hate the voice of an educated,
answer the old cartoon question, Get on board and be part of the group.
well-informed, and reasoned people,
“What’s Democracy?” And the student Who wouldn’t want to be part of that
just as they do a functioning democracy.
raises her hand. “Democracy is the movement?
freedom to elect our own Dictators.” An Antidote to Fraud
In history, that is not uncommon. Card-Stacking
Overt information manipulation It pays to be vigilant, suspicious
Students of mass communication of vested interests, to question
to embellish a product or person
and propaganda know that “the brain everything and to be aware of the
by unfair comparison or distorting
follows the eye” and that public consequences of losing the values
or omitting facts
relations practitioners managing the and traditions we hold dear.
consumption of messages are ethically Distraction
responsible for the consequences of Education and experience can
Diverting attention away from thwart those who thrive in the imagery
changing a population’s attitudes, a critically important issue by imposing
beliefs, and behaviours. of manufactured intellectual fraud.
an interesting yet trivial concept for It pays to teach our children how to
Some other people using the public focus. Exploiting a population spot a scoundrel in their midst, as well
same communication tools can exploit self-enamored by the latest technology as on an international stage.
human nature with manipulative can also be considered an effective
intent, the open gullibility of people use of distraction. Intellectual discernment through
a constant target. critical thinking, applying the tools
All the above and many more for determining the moral fitness
People want to believe and often techniques of propaganda are used of a decision, the ongoing study
accept what they hear and see. daily in the blending international and practice of ethics, professional
The phrase attributed to conmen, realms of marketing, advertising, development in our chosen fields,
gamblers, and specifically the great business, and politics. and becoming more widely read
American showman of the mid-19th in the classics, and participating
Distraction alone does not bode
Century, P. T. Barnum, sums it up: in community events are all part
well for an institution reliant on an
“There’s a sucker born every minute.” of fighting fraud, all part of nurturing
informed electorate.
Knowing some of the techniques our great democracies. s
is part of the antidote. Here are the What might seem an innocent
misstatement by an academic, Nigel Atkin teaches the Evolution
more common forms of propaganda
used in advertising and in political economic, religious, or political leader of Public Relations course online at UVic.
campaigns. at first can be accepted or dismissed He offers on-site communication
by a naïve public unaware of that workshops to leverage human capital
Glittering Generalities leader’s desired consequences. and exploit the multiplier effect
High praises for people or A politician’s goal may not be to of becoming better communicators.
products, wrapping them with win the election but to weaken the
words of patriotism, love, and other voters’ resolve to even participate Natkin2020@gmail.com
emotive imagery in democracy. Telephone: 250 889-3349
Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 11FRAUD
Sandra Gail Walker
Where There is Fraud,
There is Always
Money Laundering!
F
raud is a type of A money laundering offence may Not every one of those elements
also extend to property or proceeds must be present to suggest that fraud
criminal activity defined derived from illegal activities that took has been committed. If, however,
as abuse of position place outside Canada. the first element (intent) is present,
together with one or more of those
or false representation or elements, it is very probable that
prejudicing someone’s rights Put simply, fraud is an act criminal activity has occurred.
for personal gain. of deception intended for Common Elements of Fraud
personal gain or to cause While it is not possible or even
Put simply, fraud is an act of a loss to another party. necessary to list all the types of fraud,
deception intended for personal gain all have five common elements.
or to cause a loss to another party.
BC Notaries and British Columbia 1. Intent (to knowingly commit a
Fraud, like other crimes, can best wrongful act or achieve a purpose
be explained by three factors. Notary Corporations are subject to
inconsistent with law or public
the obligations under the Proceeds
1. A supply of motivated offenders policy)
of Crime (Money Laundering) and
2. The availability of suitable targets Terrorist Financing Act, when they Intent must be shown in fraud
engage in any of the following activities matters. Intent is rarely self-
3. The absence of capable guardians evident and must be demonstrated
on behalf of any individual or entity
or a control system to “mind the by showing a pattern of activity.
(other than their employer) or give
store” Some of the most common ways
instructions on behalf of any individual
Under Canadian law, a money or entity (other than their employer). to show intent include proving
laundering offence involves various that the accused
• Receiving or paying funds (other
acts committed with the intent to • had no legitimate motive
than those received or paid for
conceal or convert property or the for the activities;
professional fees, disbursements,
proceeds of property (such as money),
expenses, or bail) • repeatedly engaged in the
knowing or believing they were derived
from the commission of a designated • Purchasing or selling securities, same or similar activity of
offence. real estate, or business assets an apparent wrongful nature;
or entities • made conflicting statements;
In this context, a designated
offence means most serious offences • Transferring funds or securities • made admissions;
under the Criminal Code or any other by any means
• acted to impede the
federal Act. Fraud against a company can investigation of the offence;
Money-laundering includes, but be committed either internally by
• made statements he or she
is not limited to, activities relating to employees, managers, officers, or
clearly knew to be false.
illegal drug trafficking, bribery, fraud, owners of the company, or externally
forgery, murder, robbery, counterfeit by customers, vendors, and other 2. D
isguise of purpose (falsities
money, stock manipulation, tax parties. Other schemes defraud and misrepresentations employed
evasion, and copyright infringement. individuals, rather than organizations. to accomplish the scheme)
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
12 TABLE OF CONTENTSDisguise of purpose refers to the
concealment or misrepresentation
of the goal or purpose in the
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• Overt activities of threats
or violence can be avoided.
If successful, the victim may
never realize that he or she has
been defrauded.
• Disguise of purpose is in
keeping with the calculated
fraudulent crime, rather than
the spontaneous nature of other
types of criminal activities.
3. R
eliance by the offender on the
ignorance or carelessness of the
victim is often necessary for the
fraud to occur.
• Usually, the criminal will
not go forward with the
fraud unless he or she feels
confident that the victim will
not discover the crime.
4. Voluntary victim cooperation
to assist the offender merely
highlights the fact that the TheWESA Trevor Todd is an old hat (and trusted
expert) at estate litigation who believes
success of the fraudulent scheme changed.
often depends on the cooperative the new law is a game-changer- for
assistance of those who are And it's a his business and for your inheritance.
victimized by it (a company and/or sweeping
individual). Unlike street crimes, Call Trevor to get a jumpstart on
most fraud victims are persuaded change. the changes. He knows them inside
to assist in some manner. and out. Plus he loves to listen and
• Proof that the victim assisted to talk- a lot.
the offender is usually not
difficult to obtain from the
victim.
• It is important to ascertain the
exact circumstances regarding
the fraud from the victim,
clearly drawing out what made
the fraud possible.
In the case of employee thefts,
the victim company entrusted the care
of assets to the subject.
Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 13Identity Theft
One way to conceal a fraud Identity theft is the Identity theft is the appropriation
scheme is to commit an appropriation of another’s of another’s personal information
offence that is too small personal information without his or her knowledge to
commit crime as that person.
to be recognized as fraud without their knowledge to For example, money laundering allows
by the victim. commit crime as that person. criminals to conceal the proceeds of
profit-based illicit activity, while stolen
or false identities conceal the true
5. C
oncealment of the offence. It is the • Worldwide, the vast majority identity of the perpetrator of crime.
cornerstone of fraud. As opposed to of fraudsters are male. Instances
traditional criminals, who make no of fraud involving males versus Identity Theft Includes the Following.
effort to conceal their crimes, fraud females are more evenly • Theft of personal identity
perpetrators take steps to keep their information and related financial
distributed in the United States
victims ignorant. information, such as their name,
and Canada, while in Asia, the
ne way to conceal a fraud scheme
O Middle East, and Africa there are date of birth, current or previous
is to commit an offence that is too addresses
more male fraudsters than female
small to be recognized as fraud fraudsters. • Assuming another identity
by the victim. In embezzlement for fraudulent purposes
cases, for example, the amount • Before committing a crime, more
than 50 percent of fraudsters work • Producing false identities and
of money taken at any one time is
for their organization for 3 to 10 financial documents to enable
usually small, relative to the total
years and about 25 percent work other crimes
company assets. By demonstrating
a continuing pattern of thefts, the for their organization for more than Three Ways Personal Information
concealment aspect can be shown. 10 years. On average, it takes 1 to is Appropriated
o hide their actions, fraud
T 2 years before a fraudulent act is • Forged Documents
perpetrators often create complex discovered. Documents that are genuine but
financial trails. The more obscure Personal Characteristics of Fraudsters have been altered in some way,
the act, the greater the likelihood for example, photograph substitute
it will not be detected. Some fraud • Living beyond their means
• Counterfeit Documents
cases involve fraudulent invoices • Overwhelming desire for Documents where no part has
and journal entries. Concealment personal gain been produced legitimately, for
in those types of cases can often example, counterfeit passports,
• High amount of personal debt
be proven by the fact that the driver’s licences, and credit cards
entries had no purpose other than • Closely associated with customers
to conceal. Fraudulently obtained genuine
•
• Feeling their pay is not documents
Understanding Fraud Perpetrators: commensurate with their job Genuine documents that have
Typical Profile duties been improperly obtained or
• They are usually very educated • Wheeler-dealer attitude obtained through legitimate
and intelligent, have a high channels but using improper
• Strong challenge/urge to beat the details
social status, and are respected
members in their community system
Identity theft is a key enabler for
• Half of fraudsters are between the • Excessive gambling habits serious and organized crime groups
ages of 31 and 45. The majority • Feeling pressure from family and facilitates offences in nearly all
work in the accounting, finance, or peers crime markets. It undermines the
executive/upper management, integrity of the economy, financial
• Feeling a lack of recognition and banking institutions, and the
operations, or sales sectors of
an organization. for job performance immigration and welfare systems.
• Individuals in those roles often Restricting opportunity is the key Organized criminals capitalize on
have authorized access to sensitive to preventing all fraud, be it internal or every opportunity to exploit technology
information and assets. Those in external. Creating opportunity creates to commit identity theft/crime. They
management roles usually have the risk, whether that’s from fraud, theft, will use professionals or facilitators
power of management override. or robbery. to help them commit their crimes,
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
14 TABLE OF CONTENTSAdditionally, credit application Top Methods Fraudsters
Any account could be processes are increasingly vulnerable Use to take over an Account
taken over by fraudsters, to third-party application fraud 1. Notification of a change
because personal information of physical address
including bank, commonly used for passwords and
2. Adding his or her name as a
credit card, email, and identity verification is no longer
registered user on the account
other service providers. concealed. Much of this information is
easily accessible on the Internet or via 3. Changing the email address
social media; sophisticated fraudsters on an account
including information technology abuse it to commit application fraud. 4. Obtaining a debit or credit card
experts, individuals who specialize in with his or her name
identity theft, or those who can steal 5. Changing the phone number
credit card numbers and hand them Application fraud 6. Changing the password
off to someone who makes fake cards. is a rapidly growing to an online account
Identity Fraud problem around the world. 7. Changing the PIN on a card
Identity Fraud can be described as Economic hardship has 8. Obtaining cheques
the use of that stolen identity (identity driven increasing numbers Mortgage Fraud
theft) in criminal activity to obtain Defined by the Canadian Institute
goods or services by deception. It of overindebted individuals
of Mortgage Brokers & Lenders
is the actual deceptive use of the to misrepresent their as “The material misstatement,
identity information of another person qualifications for credit. misrepresentation or omission relied
(living or dead) in connection with upon by an underwriter or lender to
various frauds. fund, purchase or insure a mortgage
Financial institutions are further
It is divided into two broad categories. vulnerable to fraud attacks since loan,” mortgage fraud occurs when
customers expect a rapid response individuals defraud a Financial
1. Application Fraud Institution or private lender through
to credit applications, even via those
2. Account Takeover channels that don’t require face- the mortgage process.
Fraudsters can use the stolen identity to-face proof of applicant identity. Two Main Types
details to do the following. Those factors, combined with 1. Opportunistic Mortgage Fraud
other emerging trends, undermine is referred to a fraud for shelter.
• Open bank accounts. the security of credit application • Individual purchasers attempt
• Obtain credit cards, loans, and processes. to obtain a higher mortgage than
government benefits. they are entitled/qualified to have.
At the same time, advances such
• Order goods in the victim’s name. as chip and PIN technology have made • People may provide untrue or
it harder to commit transactional misleading information or fail
• Take over existing accounts. to disclose required information.
fraud, so fraudsters are increasingly
• Take out mobile phone contracts. turning to application fraud attacks. • They are usually determined
to meet monthly repayments.
• Obtain genuine documents, such Account takeover can happen
as passports and driver’s licences, • Scheme begins to crack
when a fraudster or computer criminal
in the victim’s name. between 12 and 24 months.
poses as a genuine customer, gains
control of an account, then makes 2. Organized Mortgage Fraud is
Stealing an individual’s identity referred to as fraud for profit.
details does not, on its own, constitute unauthorized transactions.
• Fraud committed to further
identity fraud. Using that identity for • Any account could be taken over other criminal activities
any of the above activities does. by fraudsters, including bank, • More sophisticated and can
Application Fraud credit card, email, and other involve several properties
service providers.
Application fraud is a rapidly growing • Committed by criminal groups
problem around the world. Economic • Online banking accounts are or individuals
hardship has driven increasing usually taken over as a result of • Usually requires the assistance of
numbers of overindebted individuals phishing, spyware, or malware “dirty” industry professionals, such
to misrepresent their qualifications scams. That is a form of Internet as brokers, lawyers, appraisers,
for credit. crime or computer crime. real estate agents, and so on
Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 15We are excited to announce our partnership
with Emergent to bring you a Wills solution Examples
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Be aware of the customer who
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when you are examining their
identity documents, cheques, and
so on. That is a tactic to disrupt
your concentration.
If you are interested in learning
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email info@moneylaundering.ca. s
Sandra Gail Walker has been in the
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program evaluation since 1987. She has
You and your clients undertaken a wide variety of empirical
research studies, impact evaluations,
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for them. and needs analyses in the criminal
justice, policing, finance, money
laundering, and human resources fields.
Gail has an MA (Educational Psychology,
Honours) and a BSN (Honours with
Distinction), both from the University
of Victoria, BC.
Since 2000 she has been in charge
of subscriber and education services
for About Business Crime Solutions.
ABCsolutions has become the
Give a second chance at a happy life. . . there is no better gift you can recognized information and training
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subscriber@moneylaundering.ca
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
16 TABLE OF CONTENTSFRAUD
Deterring Money Laundering and Terrorist Financing
T
he Financial Transactions mitigate the risk of your business The compliance program consists
being used for money laundering of the following.
and Reports Analysis or terrorist financing. The success • Appointing a compliance officer
Centre of Canada, of Canada’s anti-money laundering who knows the business’s
and anti-terrorism financing regime obligations and has access
known as FINTRAC, and is dependent on the collaboration to the necessary resources
31,000 businesses across the between reporting entities and to implement the program
FINTRAC.
country have a role to play • Developing and maintaining
FINTRAC produces actionable a training program
in the detection, prevention, financial intelligence relevant to
• Assessing and mitigating money
and deterrence of money investigations of money laundering
laundering and terrorist financing
(including in the context of fraud
laundering and the financing risks by means of a risk-based
offences), terrorism financing, and
approach (RBA)
of terrorist activities. threats to the security of Canada.
Research and analysis identifies trends • Having in place up-to-date
Financial Intelligence and patterns in money laundering and compliance policies and
terrorist financing that are useful to procedures
Criminals, including fraudsters, bring
illicit funds into the Canadian financial domestic and international partners. FINTRAC has designed an RBA Guide
system using methods and techniques to help businesses implement effective
Recent Amendments to the Law
to disguise them as legitimate financial measures and monitor the money
In June 2016, FINTRAC published laundering and terrorist financing risks
transactions.
a new guideline on how reporting that may be encountered as part of
For example, in real estate entities are to ascertain the identity activities and business relationships.
transactions, common methods used of clients to conform with the recent For example, businesses can ask the
by criminals to launder illicit funds amendments to the Proceeds of following questions.
include the undervaluing or overvaluing Crime (Money Laundering) and
• Do the services you provide allow
of property; rapid successive buying Terrorist Financing Act (PCMLTFA).
your client to engage in high-risk
and selling; and the use of third While businesses can continue to
transactions?
parties or companies that distance use the old methods to ascertain the
the transaction from the criminal identity of clients during the transition • Could your own office location,
source of funds. period, the new methods are to be the countries to which you transfer
implemented effective June 30, 2017. funds, and the countries from
Some professional services,
which you receive funds pose
including those of BC Notaries, In the amended regulations, there a high risk for money laundering
accountants, real estate agents, are three ways to ascertain the identity and terrorism financing activities?
and financial advisors, may be used of a client.
without those professionals knowing • Do you provide services
• Photo identification: to foreign clients?
the cash may come from criminal
Refer to photo identification
sources. • Do you deal primarily with
issued by government.
Suspicious transaction reports high-end real estate purchased
• Credit file: Refer to a Canadian or sold by clients in countries
(for both completed and attempted
credit file in existence for at least with currency restrictions?
suspicious financial transactions)
3 years. A strong compliance program
submitted to FINTRAC by reporting
entities are a key part of the financial • Dual process: Refer to information and risk-based approach provides
intelligence matrix. from two independent and reliable a solid foundation for compliance
The establishment of a strong sources. with the PCMLTFA obligations to keep
compliance program and the records, ascertain identity, and report
As of June 30, 2017, those will
implementation of an effective risk- to FINTRAC. s
be the only acceptable methods to
based approach lead to effective identify clients. Compliance programs Julie Rozon is Senior Compliance
transaction reporting and can must be updated accordingly. Officer with FINTRAC.
Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 17FRAUD
Brian Trainor
©iStockphoto.com/Highwaystarz-Photography
FIDUCIARY RESPONSIBILITY AND REGULATORY OBLIGATIONS
Protecting Money from Theft
D
uring my time with The teller, who knew the senior In the debriefing that followed the
well, suspected undue influence on situation, I asked the branch manager
a local credit union as the part of the son toward his mother to tell me what had taken place.
a fraud educator in my and approached her supervisor prior • He advised that the teller had
to handing over the cash. approached her supervisor
post-policing career, I became
“He won’t let Agnes say a word with her concerns.
involved in a case of suspected and he answers all the questions • The supervisor went to him
financial abuse against a I asked her. She seems scared of him. with the same concerns.
That’s not the Agnes I know,” the teller
member of the credit union. whispered to her supervisor, eyeing • He looked at the matter, felt there
the pair standing at her wicket a short was nothing the branch could
A teller was approached by a distance away. do since the son held a POA,
woman in her 80s accompanied by her gave the money to the son, then
son, who did all the talking. The young simply reported the transaction to
man demanded the withdrawal of The young man demanded FINTRAC, the federal government
thousands of dollars from the mother’s the withdrawal of thousands agency responsible for tracking all
savings account, waving a Power of financial dealings over the amount
of dollars from the mother’s of $10,000, as directed by law.
Attorney designation in the teller’s face
as proof he was entitled to handle his savings account, waving Based on Court decisions made
mother’s financial transactions. He a Power of Attorney… by the Supreme Court of Canada
was the designated attorney. in cases involving such incidents,
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
18 TABLE OF CONTENTSThe implied duty of care
in the banker-customer
I felt the branch manager had not relationship encompasses
done enough to determine whether
the senior member was being taken within it a duty of inquiry
advantage of financially. In essence, where circumstances are
the branch manager had placed such that the suspicions
the credit union at the risk of being LLP MACKENZIE FUJISAWA LLP
financially liable for any losses of a reasonable banker BARRISTERS & SOLICITORS
incurred by that member because would be raised.
he did not carry out due diligence.
Case Law Those involved in the issuance of
Canadian Courts have tackled the issue a Power of Attorney and the execution Proud to be serving
of financial transactions emanating
of what the responsibility should be of
those involved in handling the finances from the POA—the transfer of The Society, BC Notaries,
of others. The execution of a Power of land, stocks and bonds, Wills, and
guardianship applications—should
and Their Clients with
Attorney designation by the attorney
can affect the businesses that deal with be mindful of protecting themselves
against future accusations of not
some aspect of the grantor’s personal
finances. Those businesses are all cogs performing their duty to make enquiry • Motor vehicle accident
as the Courts have stated above.
in the wheel of that responsibility.
In Selanger United Rubber Estates
claims;
Though the cases described
below refer to the banking industry, v. Craddock et al, Judge Ungoed-
they have general applications for all Thomas, after reviewing the leading
businesses that deal with the public cases, reiterated the proper principle • Real estate litigation;
and specifically older adults. at page 1117 as follows.
In 1975, in a decision by the Selanger United Rubber Estates
BC Court of Appeal in the case of v. Craddock et al • Probate of estates;
Groves-Raffin Construction Ltd. et The implied duty of care in the
al v. Bank of Nova Scotia et al, the banker-customer relationship
following summary was written. encompasses within it a duty
Groves-Raffin Construction Ltd. v. Bank of inquiry where circumstances • Estate litigation;
of Nova Scotia (1975) 64 D.L.R. (3d) 78 are such that the suspicions of a
(BCCA) reasonable banker would be raised.
A banker’s duty to his customers o it seems to me that the
S • Contract disputes.
involves not only the primary standard of care is that which
and axiomatic obligation to carry bankers might reasonably be
out its function as a banker to expected to take according to the
honour and pay its cheques ordinary practice of bankers. The
when funds are on credit, but to test thus seems clearly to be an
exercise such care as a reasonable objective test of reasonableness.
banker would consider requisite What intervention is appropriate
to ensure that what is suspicious in that exercise of reasonable
or questionable is queried. So the care and skill again depends
duty of care may involve in some on circumstances. Where it is
circumstances a duty to make to enquire, then failure to make
QUANG T. BRIAN C.
enquiry. The test is an objective enquiry is not excused by the DUONG POSTON
one—that of a reasonable banker. conviction that the enquiry would
be futile, or that the answer would
The BC Court of Appeal is saying be false.
that not only is a bank responsible 1600 – 1095 West Pender Street
to carry out its day-to-day business Imperial Bank (1936) Vancouver, BC V6E 2M6
as a bank, it is also tasked with A bank permitting withdrawals on Phone: (604) 689-3281
making enquiries where circumstances a general power of attorney under Fax: (604) 685-6494
indicate a reasonable banker should circumstances of knowledge and www.macfuj.com
do so. suspicion by the bank that the holder
Volume 25 Number 3 Fall 2016 The Scrivener | www.notaries.bc.ca/scrivener
TABLE OF CONTENTS 19of power of attorney was committing RCMP Economic Crime Unit, I never clear that neither party is willing
a breach of trust, for the purposes of once saw a FINTRAC report. FINTRAC to concede, 1 of 2 things happens
enabling the latter to use the funds is not concerned with a senior losing . . . the police are called in to
to pay a debt he owed to the bank, $10,000 or even $1,000,000 dollars. investigate the possibility of theft
constitutes a misappropriation of the If it doesn’t involve organized crime or fraud on the part of the attorney
depositor’s money sufficient to make and/or illegal drugs, it is duly noted or the grantor or the grantor’s
the bank accountable to the aggrieved and filed. Yes, you must report it, but family sues the attorney in Civil
depositor. that’s as far as it goes. Court for loses.
Although those cases pertain Fiduciary Responsibility • The lawyer responsible for drawing
to the banking industry, they are up the POA may also be called
I lecture financial planners across
applicable to any industry that involves to task to explain how he or she
this country on those matters from
dealing with legal documents such as determined capacity at the time
Vancouver to Ottawa, Toronto, of the signing of the POA.
a Power of Attorney agreement. People
Fredericton, Trail, and Swift Current.
involved with the public must become • The bank will definitely be
I place emphasis on the Fiduciary
aware of how their interactions and involved in the law suit as a party
Responsibility area of the equation
decisions can impact not only their to the offence as will any other
clients and customers, but also their rather than on the Regulatory
Obligation. businesses or professionals who
own businesses. became involved in the matters
Not doing due diligence in before the Courts.
The instructions provided can
protecting senior clients’ money
leave professionals open to legal action • It will be up to those groups to
if they fail to support their fiduciary could be the end of a career and the
beginning of a lot of grief through the prove they did their due diligence
responsibility—to protect the client to in preventing the financial abuse.
the best of their ability from financial Civil Courts.
loss due to fraud or theft or poor Now here’s the crux of the matter.
I’ve run into the following scenario
financial decisions. How do you defend yourself in Court
in my time investigating POA abuse.
when the notes made by some
Regulatory Obligations • Mom gives her son a POA through occupations, such as the legal and
a lawyer. All seems on the up and medical professions, are regarded as
FINTRAC’s main area of focus is on
organized crime and the illegal drug up until one day, the care facility client-privileged? You cannot reveal
trade. where Mom is living notifies the what was said to you in private by
family that her bills are not being your client. To further complicate the
FINTRAC regulations direct that paid and haven’t been for several matter, what happens if your client has
any transaction over $10,000 must be months. The family contacts her Alzheimer’s and has lost capacity?
reported to them. They in turn review son and demands to know what’s
such transactions looking for the The Privacy Act
up with his mom’s finances. They
possibility of illegal money laundering. want to see copies of his mom’s The argument I hear most often
monthly bank statements. “Where concerning engaging the police in
Diligent professionals concerned
has her money has been going?” matters concerning their client is that
with the financial well-being of their
according to the Privacy Act, you cannot
clients report such transactions • As is his legal right, the son tells disclose to anyone anything that was
to FINTRAC, as is their regulatory everyone to take a hike. He was discussed between you and your client
obligation. granted the authority to act as without the proper legal vehicle.
Most people at that point though he was the grantor in
That is blatantly false and here’s
assume they have fulfilled their legal matters concerning finances and,
why: You are not governed by the
requirements. If anything suspicious as such, he is in fact his mother.
Privacy Act.
is indicated by the FINTRAC Via the POA, he is her legal
investigation regarding the $10,000 designated attorney. As such, The Privacy Act concerns only
transaction the client made, FINTRAC he has no legal obligation to those who are employees of the federal
would notify the local police authority tell anyone anything without the government such as postal workers,
to have the matter investigated further proper legal vehicle such as a Service Canada, RCMP, and the
with an eye toward criminal charges. search warrant. Canadian Armed Forces.
In the 27 years I policed, and • In come the lawyers. Letters are PIPEDA (Personal Information Protection
specifically the 5 years I spent fired across the bow of each ship and Electronic Documents Act)
investigating Power of Attorney fraud in an effort to scare the other The vast majority of Canadians are
as a Fraud Detective Sergeant in the into submitting. When it becomes covered under PIPEDA. A section
The Society of Notaries Public of British Columbia Volume 25 Number 3 Fall 2016
20 TABLE OF CONTENTSYou can also read
