We have already witnessed the federal government targeting the real estate industry when it comes to money laundering and Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) compliance. Large fines have been levied against brokerage firms that have not been in compliance at the time of the audit. Here are some questions to ask to see if you are ready in case the FINTRAC auditors come calling.

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1. Does your firm have an up-to-date FINTRAC policy and a FINTRAC compliance officer? Has everyone in your firm taken the required training online?

It is not enough to just have a FINTRAC policy. Every member of the brokerage, including sales reps, brokers and all employees should have read your company FINTRAC policy and taken the five modules on money laundering available through CREA. This should also be documented and records must be kept of this.

2. Does your brokerage provide FINTRAC update education every two years for all members of the firm, to confirm that any new guidelines are understood and followed?

For example, new FINTRAC guidelines for identifying individuals will take place after June 30, 2017. Is your firm aware of the changes?

I have been providing FINTRAC update education courses for brokerages and real estate boards for the last several years. I have tried to demonstrate in my seminars that complying with FINTRAC can actually increase business if approached in a positive manner.

3. Does your firm properly identify clients?

This may be the most important information reviewed by FINTRAC auditors. Are you making sure that your clients have a connection to Canada? The more connected they are, the less likely they will be involved in illegal activities. The more you know about a client’s employment and occupation, the easier it is to build a relationship with them. And you are complying with FINTRAC at the same time.

4. What are you doing to monitor clients in a business relationship?

If a client conducts a second transaction with your brokerage within five years, they are said to be in a business relationship with your firm and this may require ongoing monitoring.

Does your firm have a policy in place to identify whether any new client has in fact done a deal with your brokerage in the last five years, and if so, how is this client to be monitored? What additional questions should the client be asked about their new purchase or sale and whether they are in the ordinary course of the client’s business?

5. Every broker of record is required to do a comprehensive risk assessment of their brokerage every two years.

Unfortunately, most just check off some boxes on a form, stating that they have checked their records and their risk has not increased. Unfortunately, in almost all audits that I have seen, this is considered to be a serious concern of the auditors. They expect you to have reviewed a substantial number of random files to confirm that all documents have been properly prepared, signed and filed and that you have also considered other factors, including whether your firm deals with properties that are close to the U.S. border, whether your agents are part-time or full-time and the general crime rate in your own area.

Does your brokerage insist, for example, that no commission will be paid unless and until all documents, including FINTRAC, are properly completed and filed? This should be standard practice.

If your firm has any questions about FINTRAC compliance, please contact me directly.

6 COMMENTS

  1. Over 43+ years as a licensed Realtor, only in the past few years have I been asked to be an ‘unofficial cop’ and a ‘unpaid spy for FINTRAC’. Realtors have been asked to sniff out grow opps, money launderers, and whatever other illegal activity our untrained noses can find. IF we fully complied, we run the very possible risk of being sued for defamation of character, bad repercussions from convicted or un-convicted criminals that we ratted on! This not only endangers us individually but also our loved ones. Judging from the conviction success of our law agencies, the only results that I can see for complying faithfully is becoming a ‘marked person’. I have assisted in selling over a billion dollars worth of residential real estate during my career, and have never made personal friends of my clients NOR have I delved into their ‘personal life’. I don’t have access to an interrogation room with the single chair and the bright light overhead. I am a ‘sales person’ NO MORE or NO LESS. Realtors have a full time job making a living at selling real estate which they are licensed to do. It would seem the powers that be are forcing another dimension to our licensing mandate: i.e. super sleuth for FINTRAC and the POLICE. I for one have no desire to be a SPY or a COP! Many of my fellow Realtors have said the same. It seems CREA, BCREA and the other Associations that represent 101 Boards across Canada don’t agree with me OR they would have made a stand in our favor. I have to conclude they didn’t because they don’t understand the ramifications to Realtors of what is being foisted on Realtors (us). Perhaps if the over 108,000 licensed Realtors across Canada where to sign and present a petition of protest to the Federal Government against this heavy handed requirement, it is possible they may wake up and take notice of our concerns.
    My views are in no way pro criminal activity. They are meant to draw attention to my concerns and to demonstrate my faith in the agencies and forces who are trained, paid and protected to carry on their mandate of catching crooks and preventing crime. A noble mandate that is not shared by us Realtors.

  2. FINTRAC doesn’t find terrorists Never has, never will, ‘casue its not looking for them. FINTRAC IS looking for tax evaders. Ask your lawyer how much FINTRAC reporting he’s required to do and you’ll find that it’s very little. Why? Because when this legislation was being drafted and subsequently revised by the Feds, Lawyers had the Canadian Bar Association to tell the Ministry of Finance to buzz off. Realtors had CREA. ‘Nuff said.
    Thank your National Association for the fact that we are now all obliged to police/enforce this xenophobic, intrusive, confusing and ineffective policy.

  3. I agree with Don. I think it’s outrages to make realtors policemen for the Federal Government. We sell real estate. It’s the government who need to do their job tracking terrorists. Not us or our brokerages. In BC we’ve now become the police for not only the Federal Government but the Provincial Government too in doing the job of the HPO office too. These people get paid for their work. If the governments wants us to do their work for them they should pay us every time we fill out one of their forms!

  4. Would you have the link to access the CREA training for FINTRAC? I have looked for it and been unsuccessful. In fact, I haven’t found any online training at all. There seems to be some that was in effect up until the end of December and will be available again in April through Revia. As for the previous comment that money laundering shouldn’t be the Real Estate Industry’s responsibility, it comes down to knowing your client. If you know your client then you can easily complete the form in full detail. If you don’t know your client, the government wants you to ask a few more questions to get to know them.

  5. Why is the government forcing it upon the Real Estate industry to police money laundering by the criminal element. This is a subject that falls under the police forces at all levels. I have yet to see any statistics suggesting Real Estate is the prime source for criminals to launder money.

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