The requirements before...
There have been basic compliance requirements for federal Money Laundering and Anti-Terrorist Financing regulations since 2001.

• Every broker office had to appoint a “Compliance Officer”;
• Every broker office had to develop and deliver a training program for all designated employees;
• Every broker office had to create a compliance program incorporating office policies and procedures, and update them with new FINTRAC regulatory requirements on an ongoing basis;
• Every broker office was required to report all large cash and suspicious transactions to FINTRAC.
• Every broker was required to verify that the names of their clients were not on the Canadian or United Nations list of known terrorists, or terrorist organizations.

The new requirements...
The original requirements are still in effect. Every broker office has to have a “Compliance Officer”, but now there’s a lot more for the broker and the Compliance Officer to do.

The legislation sets out that effective June 23, 2008, when you receive funds in any form and in any amount , you must keep a Receipt of Funds Record and identify the client who gave you (or provided) the funds.

It is the agent of the buyer who must complete the Receipt of Funds Record, even in situations when the deposit goes directly into the account of the listing broker. There are some exceptions, such as a transaction where the buyer is not represented, or when the deposit goes directly into the account of a party not licenced in real estate (builder, lawyer, etc.) Details are provided here.

For any purchase or sale of real estate, you must complete an Identification Record (either Individual or Corporation), take steps to verify the identification of the client, and keep related records if there is a third party involved (or if you do not meet your client in a face-to-face scenario)

Some of the other new compliance requirements include:

• The compliance program and office policies have to be in writing. That used to be a regulation; now it is in the legislation. This makes it easier to enforce.
• There is a significant increase in identification and record keeping requirements. See here.
• There is the introduction of reporting suspicious “attempted” transactions. See here.
• Record keeping is now required for ALL receipts of funds. See here.
• A broker must determine whether third parties are involved in a transaction. See here.
• A broker must also have verified identification for offshore buyers and sellers, and do that by using approved “agents”. See here.
• Once every 2 years a broker must complete a self-assessment of risk of being implicated in money laundering or terrorist financing situations because of their real estate business, and identify what measures must be taken to reduce the risk. See here.

There are also several other changes to the Compliance Regime requirements. In addition to reporting requirements, you must also have a procedure in place to update information about ongoing or existing clients on file, as it becomes available.

It is also recommended that brokers keep a copy of the information that FINTRAC sends in the acknowledgement message about each report processed. This provides the date and time the report was received along with its identification number.

It is also important for brokers to know that under privacy legislation, they are responsible for the secure safekeeping of the personal information collected in the compliance process. The new federal regulations require that all FINTRAC reports be kept for five years.