Battling Money Laundering: Meeting Your FINTRAC Responsibilities
Real estate transactions can be a tempting way for individuals to disguise the source of money or assets derived from criminal activity – otherwise known as money laundering. As a real estate licensee, the possibility that clients may be purchasing real estate with the profits of illegal activities is something to be aware of, and on the alert for. By knowing the signs of a suspicious transaction, and by complying with federal reporting requirements, licensees can play an important role in efforts to stop money-laundering and terrorist financing.
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires real estate licensees in trading services to gather identification details from buyers and sellers for reporting to FINTRAC, the Financial Transactions and Reports Analysis Centre. Last year, FINTRAC introduced changes to the kinds of client information that trading services licensees need to collect, and by June 30, 2017, all of the changes will have come into force. The new obligations include:
- changes to the way that licensees may ascertain a client’s identity,
- a requirement to keep records of when identification information was referred to, and
- expanded record-keeping requirements on reasonable measure record obligations.
Complete information about the requirements for real estate licensees and brokerages is available on the FINTRAC website.
The Canadian Real Estate Association has developed a number of educational materials to help their members understand and comply with the FINTRAC requirements. You can find forms, FAQs, brochures to use with clients, guidelines for developing brokerage record-keeping policies, and more, on Realtorlink. Updated forms can also be accessed on WEBForms®.
What to Expect in a FINTRAC Audit
Managing brokers looking for more information on record-keeping requirements and audits should consult FINTRAC’s guidance document, FINTRAC Examinations: Your Responsibilities and What You Can Expect from FINTRAC.
Remember, It’s the Law
As a real estate licensee, you have an obligation to comply with all legislative requirements. As part of the Council’s brokerage inspection program, our auditors review financial processes and ensure the compliance of books and records.
Failure to comply with FINTRAC reporting requirements may lead to a Council conduct investigation, and to disciplinary action.