1. The New Anti-Money Laundering Regulations
The Canadian Real Estate Association

2. New FINTRAC Regulations
In this presentation we’ll cover:
Background & Players
Current Requirements
Major Changes
Issues to be resolved
CREA Resources
Questions and Answers
The Canadian Real Estate Association

3. New FINTRAC Regulations
Some of the key players include:
FATF – Paris-based agency sets international standards. They are concerned about the real estate industry globally.
Finance Canada – studies FATF standards, then creates policy & law for Canada.
FINTRAC – Canadian agency that implements laws, promotes compliance, gathers information and refers cases to police.
The Canadian Real Estate Association

4. New FINTRAC Regulations
Some of the background:
PCMLTFA - Created in 2002 following the September 11th attacks on NYC.
Real estate has been captured since 2002 because it has been identified as a “high risk” sector. (All Money Laundering cases have some real estate component)
Other “high-risk” industries: banks, credit unions, securities dealers, foreign exchange dealers, casinos, etc
The Canadian Real Estate Association

5. New FINTRAC Regulations
These are the timelines:
June 2005 – Canada responds to FATF recommendations
2 years of consultations, C-25 passed in 2006
Negotiations with CREA cut off in April 2007
New Regulations passed in June 2007
Guidelines prepared in winter 2007 & 2008
Real estate sector implementation date – June 23, 2008
The Canadian Real Estate Association

6. There have been 4 “pillars”:
Current FINTRAC Requirements
There have been 4 “pillars”:
Compliance Officer required in every broker office;
Develop and deliver compliance training program for all designated employees;
Create office policies and procedures, and update them with new regulatory requirements;
Report all large cash and suspicious transactions to FINTRAC
The Canadian Real Estate Association

7. A summary of what’s new:
New FINTRAC Requirements
A summary of what’s new:
Expanded reporting requirements;
Expanded record keeping requirements;
Expanded client identification (ID) requirements;
New “5th pillar” of compliance – a broker self-assessment of risk and mitigation
Now, let’s look at each one in a little more detail…..
The Canadian Real Estate Association

8. New FINTRAC Requirements
Expanded Reporting Requirements
Receipt of Funds Record must be completed for every transaction by buyer agent;
Suspicious ATTEMPTED transactions must be reported within 30 days.
The “offer” triggers the need to report an attempted transaction (up to time of closing);
You must not “tip off” the individual that you have, or intend to file, a report
The Canadian Real Estate Association

9. New FINTRAC Requirements
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New FINTRAC Requirements
Expanded Record Keeping
Five kinds of information must be kept:
Large Cash Transaction (not new)
Form is on FINTRAC website
Receipt of Funds Records(new)
Form is on WEBForms™ or in Compliance Centre
Client Information Record(new)
Forms are on WEBForms™ or in Compliance Centre
Suspicious Transaction Record (not new)
The Canadian Real Estate Association

10. New FINTRAC Requirements
Expanded Record Keeping
ALL funds received must be recorded on a new “Receipt of Funds” record;
Detailed individual information must now be obtained and kept on file;
Detailed Corporate client identification must be obtained and kept on file;
All reports must be secured in the brokerage, in electronic or hard copy, for five years;
If requested by FINTRAC – all records must be produced within 30 days.
The Canadian Real Estate Association

11. New FINTRAC Requirements
When Records must be created
Discuss FINTRAC compliance requirements before any real estate documents are signed. This is to ensure your client will not refuse to provide the required information after you have signed listing or buyer agency agreement.
The Canadian Real Estate Association

12. New FINTRAC Requirements
When Records must be created
Individual Identification Information Record must be completed by closing.
Corporate/Other Entity Identification Information Record should be completed at same time as Receipt of Funds Record.
CREA Recommendation:
identification records be completed for buyers when an offer is submitted and/or deposit made;
identification for sellers be completed when they accept an offer.
The Canadian Real Estate Association

13. New FINTRAC Regulations

14. New FINTRAC Requirements
Receipt of Funds Record
reflects money handled by real estate practitioner in transaction, NOT total value of the transaction;
Must be completed by buyer agent, no matter where the deposit ends up;
In transaction where one party may not be represented, real estate agent representing other party must complete this Record;
Buyer agent must make reasonable effort to acquire trust account info of listing broker. If info is not available, indicate that on Record.
The Canadian Real Estate Association

15. New FINTRAC Requirements
Receipt of Funds Record
If deposit ends up directly in the account of an unrepresented sector (lawyer, notary, builder, developer) then a Receipt of Funds Record is not required.
The Canadian Real Estate Association

16. New FINTRAC Regulations

17. New FINTRAC Requirements
Client ID Requirements
This is area with most substantive changes.
Brokers and Agents must:
Verify client ID, date of birth, and occupation;
Confirm the existence of the entity they represent;
For unrepresented buyers or sellers
attempt to collect identification and record findings;
If suspicious, report to FINTRAC.
Lorne Weiss section begins with this slide
The Canadian Real Estate Association

18. New FINTRAC Requirements
Special Client ID Requirements
If the client is not present, you must use an agent (representative) or mandatary to identify clients on your behalf
You MUST have a contractual agreement with the agent or mandatary in question
If no agent/mandatary – you must use 2 of 5 methods approved by FINTRAC (Only for clients residing in Canada)
CREA has provided template agreement for mandatary/agent service brokers can use.
The Canadian Real Estate Association

19. New FINTRAC Requirements
Special Client ID Requirements
If the prospective buyer or seller resides overseas – “offshore buyers and sellers”
You must use an agent or mandatary to identify your clients (i.e. an accredited real estate agent)
You MUST have a contractual agreement with the agent or mandatary in question
They must verify ORIGINAL identification documents, send copies to broker office
You are ultimately responsible for what they do
The Canadian Real Estate Association

20. New FINTRAC Requirements
Identification of Corporations
Confirm legal existence of corporation or entity;
Verify certificate of corporate status;
Verify records filed manually under provincial securities legislation;
Confirm the names of the Directors of the corporation;
Confirm individual’s mandate to represent the corporation in a real estate transaction.
The Canadian Real Estate Association

21. New FINTRAC Requirements
Identification of Entities
Existence of entity must also be confirmed.
Verify a partnership agreement
Verify articles of association/corporation
Verify an original document confirming
the existence of entity.
Verify mandate of individual representing
entity in real estate transaction.
The Canadian Real Estate Association

22. New FINTRAC Regulations

23. New FINTRAC Requirements
Identification of Third Party
Existence of third party must also be confirmed.
Question of third party involvement in
transaction must be asked of individual
and corporate clients;
If client denies involvement of third party
but REALTOR® is suspicious, that
should be noted on Identification Record;
Third party defined by FINTRAC as
someone/corporation issuing instructions
to REALTOR® client.
The Canadian Real Estate Association

24. New FINTRAC Regulations

25. New FINTRAC Requirements
Self-Assessment of Risk
This is the new “5th Pillar” of compliance.
Engaging senior management in the
detection and deterrence of money
laundering and terrorist financing
Built on a Risk-Based Approach
Risk assessment of your business
Risk mitigation, i.e. controls to handle risks
Ongoing monitoring of higher risk transactions
The Canadian Real Estate Association

26. New FINTRAC Requirements
Self-Assessment of Risk
Consider the following factors:
Products & services + delivery channels
Geographic locations where you operate
Your clients & business relationships
Any other relevant factor that exposes you
Must be conducted once every 2 years
Risk mitigation steps – to be determined
CREA has prepared a checklist to assist brokers
The Canadian Real Estate Association

27. New FINTRAC Regulations
There is support available:
Compliance Centre – 5 new modules
CREA forms (P. 13 of booklet, or on REALTOR Link®
Receipt of Funds Record
Client Information Record
Self-Assessment of Risk Checklist
Support from Staff
Consumer Brochure
Compliance training video

28. Questions? New FINTRAC Regulations
Many issues are addressed and explained in CREA booklet on FINTRAC Compliance, or on internet reference centre on
The Canadian Real Estate Association

29. The New Anti-Money Laundering Regulations
The Canadian Real Estate Association