FINTRAC has been part of every real estate transaction for years and I am continually surprised by the general lack of knowledge around what FINTRAC does. REALTORS® may look at FINTRAC as just another piece of paper to fill out when helping buyers or sellers transact but FINTRAC regulations play a crucial role in the financial and physical security of Canada and the world. Let’s consider the high points.
What exactly is FINTRAC?FINTRAC stands for the Financial Transactions and Reports Analysis Centre of Canada and exists as Canada's federal financial intelligence unit. FINTRACs mandate is to “facilitate the detection, prevention, and deterrence of money laundering and the financing of terrorist activities”. FINTRAC gets its authority from federal legislation under the Proceeds of Crime, Money Laundering, and Terrorist Financing Act (PCMLTFA), which means failure to comply with FINTRAC regulations is a violation of federal law. Check out this FINTRAC Case video.
Is FINTRAC bigger than just Canada?Yes, FINTRAC is only the Canadian branch of a united body of over 200 Financial intelligence units in countries around the world! FINTRAC and it’s affiliates work globally together to help authorities go after the money of criminals dealing in illegal drugs, human trafficking, and even funding for weapons of mass destruction.
What are REALTOR® and consumer responsibilities?REALTORS® are required to identify all individuals who transact in real estate as either buyers or sellers. This identification requires that a REALTOR® see a Photo Identification document and record that information for the brokerage to keep on file for 5 years. In addition, the REALTOR® must ask questions about a client's occupation, or other details about their situation to assess risk levels. Corporations who buy or sell real estate also must be identified through corporate registries, individuals who have signing authority, and details about all beneficial owners of the corporation. Even individuals who are not represented by a REALTOR® must be asked for ID as well. A REALTOR® is a front-line operator who gathers data that may be necessary for FINTRAC to use in the future, and it’s the law.
What if FINTRAC regulations are not followed?As federal legislation, FINTRAC is mandatory, and non-compliance has penalties of up to $2,000,000 and/or 5 years of prison! The Government of Canada is serious about stopping financial fraud, money laundering, human trafficking, criminal cash flows, and terrorist funding methods, and REALTORS® have an important role to play.
Before FINTRAC, Canada did not have a coordinated and targeted strategy for financial intelligence gathering and reporting, but the terrorist attacks of September 11, 2001, in New York City changed all that. The concept for a global cohesive community to develop a strategy around stopping the flow of criminal financing has led to the PCMLTFA and the FINTRAC regulations we have today.
Provincial Practice Advisor
Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.
Email: email@example.comPhone: 403-209-3619