MARKET MOVERS

[Hugo Moguel]

Hello everybody and thanks for joining us again. On this third episode of Market Movers, we decided to step away from the market specific discussions that we’ve been having and look at something more operational when we’re transacting real estate business here in Belize. It had been a dirty word, so to speak, early on because regulations are necessary, absolutely, but sometimes there’s always the fear of over-regulation and overreach.

 

But that word, at least in my career, came about decades ago. It started decades ago, at least in the banking industry, and I was aware of it, knew it was coming, and it was something that was necessary and started becoming a major factor in other industries, in industries that have financial ties, right, tied to finance. And our industry, real estate, is one of them, and the word I’m talking about is compliance.

 

Here, compliance, compliance, what is compliance, right, and why do we need it? About, so VISTA came about 21 years ago, and there were already some measures mostly surrounded or being enforced by the banking industry. But fast forward to today, and real estate is a major industry that’s looked at and on a scrutinizing lens when it comes to money laundering and funding of terrorism under that sort of lens, right.

 

And we’ll get into why and why that has come to pass, but it’s something that us as real estate professionals now have to deal with, have to comply with, and also have to educate our customers, our clients why it’s important and have them participate and assist us and support us in those, in that regard. Now, sitting with me today is Mrs. Janine Vernon, who is our general manager at VISTA Real Estate. She’s also our transactional manager, so when you have a transaction, we’re managing it, finding a buyer, as some of you know, is just one step of the process.

 

We also have to close, and when managing that transaction, that’s where you have to take regulations into place, you have to have strict guidelines and make sure that we’re compliant in all measures, so that you have a successful close and you don’t have surprises at the end that we all reach where we need to go, right? And so Janine joined us, I think, back in 2015?

 

[Jeanine Vernon]

16, 2016.

 

[Hugo Moguel]

16. When Janine joined us, she came with 21 plus years, I think, of banking experience, and part of her training was, a big part of her training was in compliance, right? She was an expert in it, and so it’s a perfect fit for us, because as real estate brokers and agents, we’re regarded now as reporting agencies, right?

 

And we fell under the guidelines of the FIU, the Financial Intelligence Unit, right? And if you’re well-versed in the industry, you’ll know what AML is, and that’s the broad umbrella that covers our compliance regime, our compliance measures, right? Anti-money laundering, right?

 

And there’s so many things to do under present regulations that we’re just not sure that everybody is aware or is even doing So I asked Janine to join us today because she is the expert, and with her support, we’re confident in where our standing is as a company, and also looking at the news that came out, I think it was late last year, that Belize also has risen in terms of its status as a country with strong compliance measures, right?

 

In preventing and deterring money laundering and the funding of terrorism. That was something that a lot of people worked very hard on. The FIU mostly was led by the FIU, the government of Belize, and also you needed the private sector to assist and comply and be versed in what it is to be fully compliant.

 

So we all did our part in that, and thankfully, Belize came on top. And so it’s for the rest of us now in the industry to step up and understand why we have these measures, and instead of resisting to go buy it, because it is important and it’s something that can help all of us, right? So to get that started, Janine, why do we need compliance measures when it comes to AML?

 

[Jeanine Vernon]

We need compliance measures. We need for all of us to meet the compliance requirements because we want to protect our financial system. That’s number one.

 

And it’s not a big deal when you think about the regulations, what we need to accomplish. The rules are, there are five pillars for the AML, CFT, CPF regulations. And they’re quite simple.

 

[Hugo Moguel]

What are the five pillars? One.

 

[Jeanine Vernon]

Compliance officer.

 

[Hugo Moguel]

Every company has to have a compliance officer.

 

[Jeanine Vernon]

Even if it’s a sole trader kind of company, sole proprietorship, then you are the compliance.

 

[Hugo Moguel]

Yeah, sole proprietor, then you are the compliance officer. So you’re the person responsible.

 

[Jeanine Vernon]

Somebody that’s management level, somebody who knows about compliance and the regulations involved.

 

[Hugo Moguel]

Can make decisions and make sure that the procedures, the policies are being followed within the company, right? What’s number two?

 

[Jeanine Vernon]

You must have, you must adopt a risk management or risk assessment.

 

[Hugo Moguel]

You have to assess your company in terms of its level of risk, right? So you conduct a risk assessment. And do you do that on your own or can you hire someone?

 

[Jeanine Vernon]

You can hire somebody to assist you with it, but you have to understand your position in this industry or for your client. You have to understand it.

 

[Hugo Moguel]

All right. So articulate three for me then. Two is the assessment.

 

[Jeanine Vernon]

Two is the risk-based assessment. And three would be an independent audit.

 

[Hugo Moguel]

To conduct an independent audit.

 

[Jeanine Vernon]

At least annually. At least annually.

 

[Hugo Moguel]

Okay. That way you just ensure that what you’re doing is right. And then there are a few experts around that you can locate that can come and know how to conduct this assessment, right?

 

So number four would be to ensure that your company has a compliance manual, right? Everything is stated in black and white. So your procedures, how you do your reviews, the information you need to get from your clients, and then to judge the transaction, and then what to do if there is a suspicious element to the transaction, right?

 

So there’s a black and white procedure to this that you don’t have to then, okay, we’re faced and let’s guess what do we do next. No, it’s in your manual. And your manual, I would think, would have been assessed by whoever is doing the assessment review, right?

 

To make sure that everything is in line.

 

[Jeanine Vernon]

That is part of the audit, yes.

 

[Hugo Moguel]

Okay, perfect. But this manual is specific to each company, right? Yes.

 

Given its structure, its size, and all that.

 

[Jeanine Vernon]

Because every company might do things a little differently to suit you, the company, right? And then a big part of it too, so this is another pillar, is to do training within your company.

 

[Hugo Moguel]

So that’s the fifth pillar.

 

[Jeanine Vernon]

That’s the fifth one. You must do training so that everybody understands what it is about, what you’re trying to achieve, how everybody could assist with getting, you know, to having it done. And training would be at least once a year.

 

You should be doing ongoing training throughout the year, but at least once a year, everybody sit down and understand. And you can do specific training. So let’s say the frontline staff would have a specific training session, you know, just for them because they might need something different than somebody in the back office operations kind of thing.

 

So, but that training is very important. Everybody understanding, you know, what they, what we want to achieve.

 

[Hugo Moguel]

Excellent. And it’s just the people that face clients that deal with customers that undergo this training?

 

[Jeanine Vernon]

No, everybody within the company, every single body within the company should undergo compliance training.

 

[Hugo Moguel]

Excellent. So having said that now, and let’s go back now, real estate in Belize was seen as a high risk industry, among others, right? But why specifically real estate in Belize?

 

[Jeanine Vernon]

Because it usually for real estate, it brings a lot of money. You’re talking about a lot of money flowing back and front, right? So, well, for Vista Real Estate, we really just accept wire transfers or transfers from bank to bank.

 

And just by that nature, we’re not dealing in cash money, but just because of that, we want, I mean, whenever you’re talking about international transfers and so on, you know, you’re putting yourself in a kind of bracket that requires you to be more diligent and you want to do more due diligence because you might not absolutely know that client. So you want to ensure that everything is good. You understand why this, the purpose of this transaction, you want to ensure that you understand why this person wants this property.

 

Is he moving from there to Belize? Maybe he’s using it for a business purpose, you know, you want to ensure and you want to know the source of the wealth. You know, this isn’t somebody who might have gotten the monies illegitimately, but, you know, somebody who saved up monies over time and purchased this property, you know, legitimately.

 

Yeah.

 

[Hugo Moguel]

You mentioned this term KYC. KYC. What’s KYC?

 

[Jeanine Vernon]

KYC means knowing your customer. It’s just, you want to ensure that you know the person or, you know, never really know somebody, but you know him enough to understand how come this transaction is possible and that, you know, you feel comfortable with it. Once you feel comfortable with it, then, you know, you can move on with it.

 

If for some reason there is any reason for doubting information or, you know, feel comfortable with it, then that’s why the FIU is there. You can always forward that information to the FIU, give them the whole story with all documentation and they will take it from there. They will do whatever investigation needed and you’re okay after that.

 

[Hugo Moguel]

As a reporting agency, right, it is our duty to report any suspicious transactions, right? Especially if we’re handling it because as brokers or agents, you are conducting the transaction. You’re putting the deal together and you’re closing it, right?

 

So you have a huge responsibility in this and it’s up to us to ensure that we know the parties involved because it’s not every time there’s a personal client, someone that you’ve known for decades or years or, you know, you have a reasonable understanding of them and their business, right? So it’s not really about getting into their personal business, but if somebody walks in the door and wants to do an earnest transaction, you know, I love Belize, I want to invest in Belize, then we need to know more about you, right? We’re receiving money on behalf of clients.

 

We are facilitating a transaction that involves sometimes large sums of money, right, to then convert that into an asset to get a title in exchange, right, to get ownership interest in real property. So you do have to have a reasonable amount of knowledge about the parties that you’re bringing together in this transaction. Now there has been some resistance from some people.

 

They don’t want to bother with it, any little thing, but that’s where you have to stake your claim to it because you need this. You have to be compliant and as a compliant company, that elevates you to a certain status and you should be proud of that, that you want to abide by the rules and regulations because there’s a reason for them being here. At the end of the day, you know, I used to tell people all the time, it’s like, yeah, I mean, nobody wants extra forms to fill or another hurdle to cross, but I think the FIU has been fair in that they would look at anything that you deem suspicious and advise you on it, right?

 

And that’s been a key element of working together, right, of having a cooperative or a cooperating agency, so to speak, right, that’s overseeing you and you’re working with them to make sure that you’re fully compliant. Now at the end of the day, it really protects you, right? You want to serve your clients, you want to serve your customers, you want to get the deal done, you want to get the sale completed, but at the same time, you can’t risk yourself and you can’t risk the financial system doing it, right?

 

I mean, you should not, right, and you should care about that because if you’re doing this business in an earnest way, you’re trying to do it for the long term. You’re not going to be a long-term productive agent or broker if you’re disregarding these measures, right? We’re quickly moving towards licensing, right, and so compliance, knowledge, and capacity, right, are going to be important factors moving forward.

 

Belize has really stepped up regionally. The region is trying to catch up, right, but these things are in the U.S. and they’re even stricter, I think, in Europe and in other jurisdictions, right? So that is the way of the world and everything is increasingly digital as well.

 

So we have to not look at it as a hindrance with a way to really step up and be prepared and raise our standards and be able to operate in that environment.

 

[Jeanine Vernon]

Exactly, and everybody, I mean, everybody wants to ensure that we protect our business, we protect our country, we protect, you know, other clients, and so FIU is definitely there, or the other regulatory authorities as well, there to advise us. I mean, you can always go on a, let’s say, the FIU website and that has loads of information just in order to educate everybody, you know, so that you know exactly what to expect, what to do, what not to do, and if you have any kind of suspicion at all about a transaction, you always can turn to the FIU and they will definitely help you with it.

 

[Hugo Moguel]

As best you reported something, I mean, nothing might come of it, but you did your job in reporting it and stating why.

 

[Jeanine Vernon]

And it’s not only for the agencies, the real estate agencies or companies in general, we’re specifically talking about real estate, but you know, the banks, everybody else, but also if a client or a person, somebody has suspicion on something happening within their community or their area, they can always call the FIU and get some guidance.

 

[Hugo Moguel]

Yeah, yeah, the FIU has been very good. I mean, I know they reached out to the association, to the Real Estate Association over the years. We’ve held many training sessions, many presentations by them on what the new regulations are, and even working with us to get up to speed, right, to make sure that we were as an industry as compliant as we could be.

 

We had a review, the entire country had a review, the industry had a review a couple years back, because there is an international authority overseeing these things, right, and they grade the countries and all that. That’s FATIF, right? What does FATIF stand for?

 

[Jeanine Vernon]

The Financial Action Task Force.

 

[Hugo Moguel]

Ah, there you go. So, moving forward, we employed very standard forms. We call them the SIF and EBIF, right?

 

And can you tell us more about those?

 

[Jeanine Vernon]

The SIF and EBIF, or well, we named it as such. The SIF is the Seller’s Information Forms, which we ask simple questions on those, but really just to know our clients a little more, you know, your personal, like, details such as your address, occupation, what you’re doing now, if you’re retired, what you were doing previously, so that we understand where the wealth comes from in purchasing this property. We want to understand whether or not you are a politically exposed person, because that makes a difference on, you know, or risk assessment.

 

The EBIF would be the Buyer’s Information Form with similar information that we want to get, um, so that we understand our clients more. You mentioned just now about FIU and, you know, how they’ve been trying to reach out to the different associations, the agencies, through the associations and so on, and just lately, or last year and the year before, they’ve been doing so much in trying to get in touch with everybody and in inviting them to conferences and so on. Remember just before we had the FATF assessing Belize, we were going to conferences and so on at the central bank area.

 

FIU hosted that and, you know, they were, you know, trying to get everybody up to date with what is going on and, you know, getting compliant and so on, so that everybody understands what is required. We all have to be gatekeepers, and so they are trying to educate everybody, as much people as they can get in touch with.

 

[Hugo Moguel]

Yeah, and I think us as professionals need to educate our clients, right, our colleagues as well, and be there to offer some advice. It’s not a competition. It’s something that if we all work together on it, it’ll be a lot easier to do, right, and to manage, you know, some…

 

[Jeanine Vernon]

And this is something worldwide. It’s not just for Belize. Everybody in the world does this, so…

 

[Hugo Moguel]

Yeah, it’s becoming a standard thing.

 

[Jeanine Vernon]

Yes.

 

[Hugo Moguel]

It’s becoming a standard thing.

 

[Jeanine Vernon]

It’s not something new that our clients might not know of or so. You go to any place, even a store, and they will ask you for your ID if you present a credit card or something like that.

 

[Hugo Moguel]

I always joke with the bank, we’re afraid of money, you’ll come to deposit any cash, and now you have like a short, smaller and smaller cash limits, right? But…

 

[Jeanine Vernon]

But we understand why to…

 

[Hugo Moguel]

Sure, sure. And, you know, we understand why, and this is where you have to look at the opportunity in it, right? You have to do it.

 

So, us as service providers, right, we need to look at the customer service side of it. Yes, it benefits the customer. Does the customer know that, right?

 

Can we make it easier for our customers, right? Or do we need to say, this is a lot of do it or not? No, right?

 

So, us as service providers need to figure out a way to be more customer-centric and offer the level of service that will make it easier for them to comply and give you the information you’re requesting, right? It’s not rocket science, you know? And at the end of the day, how do you know you’re not wasting your time with this customer, with this client, right?

 

How do you know that what they’re saying is factual, right? I mean, it’s basic research and business. You enter into, in our industry, it’s like you get into little businesses, little enterprises every day when you have a transaction, right?

 

You’re dealing with two partners, three partners or whatever the number of people may be to achieve one goal, right? So, in any business, when you’re doing a transaction, there’s a certain level of trust, a certain level of commitment, right? And there are expectations between those two.

 

So, you have to be able to learn how to navigate that, right? And get that information and know that, listen, we’re not wasting our time here, right? Who we’re presenting is real.

 

This is the person, this is what’s going on and this is what you can expect and be able to do that on both sides. So that at the end of the day, when the transaction is done, there are no suspicions or any worries or anything. It is done and we’re good and everybody’s happy and that’s a true mark of a successful transaction, right?

 

[Jeanine Vernon]

When a client comes to the office and wants to sell property as well, listing the properties with us, you know, they want to know that they’re listing it with a reputable company. So, they want to ensure that they have the correct company to do that, that not just any who would come and, you know, buy the property. So, it is important on both sides, you know, whether Vista Real Estate, you know, we will ensure that we’re compliant in regards to who is purchasing, who is selling, but that client also who is listing wants to know that they’re coming to somebody good, who knows all about this and would, you know, provide the proper service to them.

 

[Hugo Moguel]

100%. I mean, sometimes the hardest part of our business is dealing with people and personalities and all these things. So, this is an effort to kind of sensitize the market on these things and accept it or begin to accept it as standard, standard practice.

 

There’s value to it and so, like you rightly said, I want the right company representing me on this sale. I want them, I want someone that takes the law seriously and knows the regulations governing its business, right? Buyers as well.

 

When buyers come in, they have to know that they’re being represented by someone that earnestly wants to make a legal and fully compliant transaction take place. So that when they invest, they can invest with confidence, right? And ensure that everything was done properly and that they can move on to developing or furthering in their investment, not having to worry about something that may have, a loose end that may have been left behind.

 

So, yeah, that’s an important question to ask of anyone representing you, whether it’s to represent your property for sale or rent or to represent you as a buyer or a tenant, right? So, as we wrap up episode three of Market Movers, we’re leaving on a note to try to find out more, ask your broker, your agent about compliance and see how prepared they are and to ensure that these things are covered. That when, if anyone, any authority asks that we have a file on that transaction and that the required information is there, you as a professional, as a real estate professional, should know that and be proud that you have that and treat it with the respect that it deserves.

 

You have your files totally in order and you can go back and you can see through it and have a clear trail of the transaction. It’s necessary and it’s the way of the world and it will set you apart to high level. And speaking of a high standard, I’d like to thank our hosts yet again, Bricks and Books on 1719 Regent Street, Bricks and Books Cafe, excellent coffee and pastries, but above all the ambience, right?

 

We love this part of the city, downtown, historic location, they’re in a historic building, a really unique space and an ambience that is unmatched. So, thanks to them again and we’ll see you on the next one.