August 8th - 2008

New FINTRAC rules in place

The specific regulations for the real estate sector for anti-money laundering and anti-terrorist financing took effect on June 23rd, 2008.

The specific regulations for the real estate sector for anti-money laundering and anti-terrorist financing took effect on June 23rd, 2008. Criminal penalties for wilful non-compliance to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act also took effect in June, followed by the civil penalties, including administrative monetary penalties (AMPs) that take effect on December 31st, 2008.
 
At the time of printing FINTRAC had assured CREA that enforcement of the new regulations will be gradually phased-in, and that considerable efforts will be made by the federal government to promote a better understanding of both money laundering risks and the new measures developed to combat them - as they did when the initial requirements became law in 2002. FINTRAC has also advised that criminal charges will only be imposed for repeated and deliberate or wilful non-compliance during this unofficial “phase-in” period.
 
Where to find information
All of these changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act will require brokers and sales representatives to collect more information than ever before. These changes also mean that brokerage office compliance policies must be revised and training programs updated to reflect the new requirements. To help REALTORS® learn about their requirements and to comply, several support materials are available on REALTORLink™ including a booklet in PDF, a convenient web site which has been updated with the most recent content and a Power Point presentation explaining the new requirements.
 
Four forms have also been developed by CREA to help with compliance including the Risk Assessment form for REALTORS®, the Individual Identification Information Record, the Corporation/Other Entity Identification Information Record and the Receipt of Funds Record form. OREA members can rely on the CREA information as guidance for complying with requirements, including using the forms provided by CREA for this purpose. OREA will be working with CREA to determine the best way for the forms to be made available to our members.
 
CREA has also produced a FINTRAC compliance training video and a template service agreement brokers can use with an agent or mandatary.
 
Updated training modules are available under the Training tab in the Money Laundering Compliance Centre on the CREA site. And, OREA offers a two-credit online course called “Money Laundering” and a three-credit classroom course called “Money Laundering and Grow Houses” both of which will address the changes. For more information, visit the continuing education section of this website or contact your board.
 
Law more onerous since 2002
For six years, brokerages have had to comply with basic requirements for federal Money Laundering and Anti-Terrorist Financing regulations including the appointment of a “Compliance Officer” in every brokerage office. Those original requirements are still in effect, but now there’s a lot more for the brokerage and the Compliance Officer to do.
 
The CREA booklet Information for REALTORS® about the new FINTRAC compliance requirements available on REALTORLink™, page 3, provides good background information as well as detailing how to comply with the regulation. Also see the April and June 2008 issues of the REALTOR® EDGE.
 
For more information check www.fintrac.gc.ca.
 
Amendments still to come
CREA had sought clarification on from FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada), which will be reflected in amended regulations later this summer, but currently can be considered to be “in effect.” The clarifications deal with the requirement that a REALTOR® must identify beneficial owners or assignees in a transaction, the identification of unrepresented buyer or seller, and the Receipt of Funds Record.
 
When the amendments are tabled, the regulations regarding the Receipt of Funds Record will be clarified. At the time of printing, the form required information about the account where the funds were deposited, but FINTRAC has advised that there must be a reasonable attempt to identify the account. Members can also consult the pages of questions and answers added to the REALTORLink™ site.
 
As amendments are still to be made it is best to frequently consult REALTORLink™ or www.fintrac.ca directly for further clarifications.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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