Is client identification required?
Yes. You now have to identify the client in each and every real estate transaction where you are acting as the agent. That means it is required for every purchase and sale of real property, and it must be completed at the time of the transaction. Under the previous regulations, if you have identified an individual before, you do not have to do so again if you recognize the individual. Under the new regulations, if you have doubts about the information collected about an individual’s previous identification, you must go through the identification process again. You do not have to go through the identification process again if you think that doing so would “tip off” the individual that you intend to submit a report to FINTRAC.

What client identification is required?
To identify an individual, refer to the individual's birth certificate, driver's licence, passport, record of landing, permanent resident card or other similar government-issued document. You can refer to an individual's provincial health card, but not if it is issued by Ontario, Manitoba or PEI. In Quebec, you cannot ask to see a client's health card, but you can accept it if the client wants to use it for identification purposes. For a document to be acceptable for identification purposes, it must have a unique identifier number. The document must be a valid one and cannot have expired. The use of a social insurance number (SIN) card to verify the identity of a client is not recommended, because the SIN (i.e. the number itself) is not to be provided to FINTRAC on any type of report.

What if my client is a corporation or legal entity?
You have to confirm the existence of any corporation or other entity for which you have to keep a Corporate Identification Information Record or a Receipt of Funds Record. You also have to determine the corporation’s name, address and the names of its directors. You must also verify that the individual involved has a mandate to represent the corporation or entity.

If the record is an electronic version, you have to keep a record of the corporation's registration number, including the type and source of the record. An electronic version of a record has to be from a public source. For example, you can get information about a corporation's name and address and the names of its directors from Industry Canada's Strategis federal corporations database on the Corporations Canada page of the Strategis Web site (http://strategis.ic.gc.ca). As another example, you may also get this type of information if you subscribe to a corporation searching and registration service, or to a provincial registration data base.

In the case of an entity other than a corporation, you can refer to a partnership agreement, articles of association or any other similar record that confirms the entity's existence. The record you use to confirm the existence of an entity can be paper or an electronic version. Although such information may be available verbally (such as by phone), it is not acceptable for these purposes, as you have to refer to a record. If the record is in paper format, you have to keep the record or a copy of it.

If the record is an electronic version, you have to keep a record of the entity's registration number,including the type and source of the record. An electronic version of a record also has to be from a public source.

When do I have to complete the Identification Information Record?
We recommend that an Identification Information Record be completed for a buyer when a deposit is made. We recommend it be completed for a seller when the seller accepts the offer. When a REALTOR® completes a Receipt of Funds Record, they must also complete an Identification Information Record at the same time, unless the Information Record was completed prior to the receipt of funds. When both the buyer and seller are represented, it is the agent of the buyer who is required to complete and retain the Receipt of Funds Record, regardless of who retains the deposit.

What happens if I never have a face-to-face meeting with my client – how do I verify their identification.
If that client resides in Canada, there are two methods specified by FINTRAC: the identification product or credit file method, or the Attestation method (agent or mandatary).

For the first option (ID product or credit file) there are a total of five resources you can use to comply, but some cannot be done in combination with others. These are explained in detail here.

For the second option (Attestation) a broker office must have a contracted agent in place who can meet the individual, review the required identification documents, and forward a report for the file. That agent can be a REALTOR® or licensed real estate practitioner, or a lawyer or notary. You can use this contracted agent, or mandatary, in your city, province or any other country when you are not meeting your client face-to-face. A template agreement for use of an agent or mandatary is posted in the Money Laundering Compliance Centre on www.realtorlink.ca.

When do I have to have an Identification Information Record completed?
It must be completed by the date of the transaction, which FINTRAC defines as the closing, usually done in a lawyers office. It can be completed at any time before that, but must be completed and on file by the date the deeds are signed. However, when funds are received both the Identification Information Record and the Receipt of Funds Record must be completed at the same time.

Do I have to track all funds received, or only those of $10,000 or more?
You must have a report on file for all funds a REALTOR® receives, called the Receipt of Funds Record. A sample form for this purpose is posted on REALTOR Link®, and is available in WEBForms™. A sample is also provided here. The content of this new record will be very similar to that of a large cash transaction record. However, it will apply when you receive any amount, whether or not it is in cash. If you have to keep a large cash transaction record, you will not have to keep a receipt of funds record for the same transaction. Also, if the information in a Receipt of Funds Record is readily available in other records you have to keep under these rules, you do not have to keep it again.

If the Receipt of Funds Record is about an entity, you will have to include the entity’s address and nature of their principal business. In addition, if the record is about a corporation, you will also need to keep a copy of the part of the official corporate records that give the individual the power to sign documents on behalf of the corporation regarding the transaction.

Is there a cash deposit of $10,000 or more?
If yes, it must be reported to FINTRAC within 15 days of the cash being offered by the client, or potential client by using the Large Cash Transaction Report. No report is required if the funds are from a financial entity such as a chartered bank or Credit Union, or from the federal, provincial or municipal government, any crown agency, or a public hospital if these entities are involved as buyers or sellers. Please refer to the Definitions section here for the parameters used for determining what a large cash transaction is. This requirement has been in effect since 2001.

The potential penalty for non-compliance is up to $500,000 for the first offence, and a fine up to $1 million for all subsequent offences.

Are the buyers or sellers known terrorists?
There is a registry of known terrorists or terrorist groups to use for verification on the FINTRAC website. Known terrorist property must be “frozen” under the Criminal Code. If anyone on the list is involved, you must not complete the transaction. Immediately report it to FINTRAC, and alert the security agencies or police. This requirement has been in effect since 2001.

Are the buyers or sellers suspected terrorists?
This may be a judgment call by the REALTOR®. If you suspect control by a terrorist group, you must file a Suspicious Transaction Report (STR). This report must only be sent by hard copy to FINTRAC, which means registered mail or fax. The report must be filed within 30 calendar days. This requirement has been in effect since 2001.

Failure to comply is viewed as a serious offence. The potential penalty for non-compliance is up to five years in prison, and a fine up to $2 million for each offence.

Is there something suspicious about this transaction?
This is a judgment call by the REALTOR®. You must report if you have “reasonable grounds” to suspect a transaction is related to a money laundering or terrorist financing offence. If in doubt -better to report, than not to report. Those “reasonable grounds” can include substantial down payments in cash, or unusual sources for cash; funds drawn from an offshore bank; someone purchasing personal property under a corporate veil; no inspection of property, or multiple properties purchased in a short period of time, or buyer completing the closing with cash. This requirement has been in effect since 2001.

What’s new is the requirement to report even a suspicious attempted transaction. Attempted is defined as when an offer is presented, and not before. It means you have to file a report whether the transaction is completed or not, based on the suspicions of the REALTOR®. Please refer to the Definitions section here for the parameters used for determining what a suspicious attempted transaction is.

In cases where a REALTOR® has decided to file a “suspicious report”, they must not let the individual know they intend to, or have filed a report. They must not ask any questions that will arouse the client’s suspicions. There is protection from civil or criminal liability for filing a FINTRAC report as long as it is done “in good faith”.

The potential penalty for non-compliance is up to five years in prison, and a fine up to $2 million for each offence.