The FINTRAC updates announced on June 1, 2021 must be complied with by real estate agents and brokerages across Canada starting on April 1, 2022. Here are answers to five of the most frequently asked questions I receive when conducting FINTRAC updates for brokerages and real estate boards.
1. Why should I care about FINTRAC?
To me the main reason is that if a lender is suspicious about any buyer at any time before closing, they can cancel the mortgage commitment. Then the deal may not close and you will not be paid your commission. Do not associate with or represent any suspicious buyers.
2. Why does FINTRAC matter if I do not accept cash as a deposit on any real estate agreement?
FINTRAC is not just about cash. Every bank draft you receive as a deposit on a real estate agreement is suspicious because there is rarely any proof who purchased it or how they purchased it. What about a corporation that buys or sells real estate? Do you know who their shareholders are who actually own the corporation? They could be criminals. All of these are examples of potential money laundering.
3. What are some of the key reminders when completing the FINTRAC ID forms?
All sections need to be completed carefully. The client occupation should be specific because this connects the client to their geographic location. Always ask if the deal is being done on behalf of a third party.
4. What are some of the key new requirements announced June 1, 2021?
Every new client should now be considered to be in a business relationship with your brokerage, regardless how many deals they have done in the past with your brokerage. As such, a proper explanation of the deal should be included in section D of the FINTRAC Identification form. There is also a new Beneficial Ownership Form to complete for every client, which will, for example, ask for details on all shareholders of a corporation who own more than 25 per cent of the shares and whether a buyer may be a Politically Exposed Person.
5. What must a brokerage do now to make sure they comply with their FINTRAC obligations?
Real estate brokerages must make sure they have an up-to-date FINTRAC policy with a FINTRAC compliance officer; that all agents and employees of the brokerage have taken the required FINTRAC training; that a proper brokerage risk assessment is completed every two years; and that a FINTRAC audit is also completed to make sure that your FINTRAC regime is up-to-date. I have completed FINTRAC audits for real estate brokerages across Ontario and in other provinces.
If you have any question related to FINTRAC, or if you want to set up a seminar for your brokerage, do not hesitate to contact me.