FINTRAC is the Financial Transactions and Reports Analysis Centre of Canada. This independent, autonomous federal organization was established by and operates within the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.
Its mandate is to facilitate the detection, prevention, and deterrence of money laundering and terrorist financing activities in Canada and abroad. Following reports submitted by various stakeholders bound by this law, FINTRAC is responsible for analyzing and transmitting certain information to Canadian police, law enforcement, and national security agencies to support them in their investigations on money laundering and terrorist financing.
Money laundering is the process used to disguise the source of money or assets derived from criminal activity.
Terrorist financing provides funds for terrorist activity. It may involve funds raised from legitimate sources, such as personal donations, profits from businesses, or charitable organizations, as well as from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping, and extortion.
Real estate brokers are among the various stakeholders involved in the fight against the proceeds of crime and terrorist financing. The RE/MAX network is proud to be a part of this endeavour, and we are doing everything within our power to ensure our brokers are able to meet all of their obligations as they represent you for the sale or purchase of a property.
Under the law, your broker has a duty to know their client, all parties involved in the transaction, and the transaction itself. Accordingly, they must, among other things, verify and collect personal information about you. The law requires your broker to keep a record of this information for at least five (5) years following the transaction.
If you are acting on your own behalf in the framework of a transaction, your broker must collect the following information:
If you are part of a group of buyers or sellers, your broker must collect the same information for all parties involved in the transaction.
If you are acting on behalf of an entity, your broker must collect the following information:
Finally, the broker must keep a copy of the part of the entity’s official corporate records authorizing you to act on its behalf for the transaction (i.e., a resolution).
Accordingly, your broker may ask you to produce a valid piece of photo ID such as a driver’s licence, passport, etc. They may also ask you for documents containing valid updated information from two reliable sources to verify your identity.
If you are an unrepresented buyer or seller, meaning you are buying or selling a piece of real estate without the assistance of a broker, the law requires the other party’s broker to verify and collect personal information about you.
Your broker is required by law to determine whether a third party is involved in the transaction, meaning that you are following the instructions of another person in the framework of this transaction. In such a case, your broker must collect personal information about the other party as well as the nature of the relationship between you and this party.
By law, your broker must take all reasonable measures to determine whether you are a PEP or HIO, or the family member or close associate of a PEP or HIO.
The law considers that you are a PEP if you hold – or have held within the last five years – a specific office or position in or on behalf of the Canadian federal government, a provincial (or territorial) government, a Canadian municipal government, or if you hold office or have held a position in or on behalf of a foreign state, such as acting as governor, ambassador, judge, leader or president of a political party, etc.
If you are a PEP or HIO, your broker must take certain measures to, among other things, establish the source of your wealth.
When you hire a real estate broker to represent you, the law considers that you are in a business relationship with them. When your broker is in the presence of a business relationship, they are required know the purpose and intended nature of that business relationship, maintain up-to-date information about your identity, and evaluate whether you represent an additional risk under the law. To achieve this, your broker may ask you additional questions regarding the transaction or to validate your identity.
The law provides a number of guarantees to protect your right to privacy, such as:
Unfortunately, if you refuse to identify yourself, your broker will not be able to represent you for the sale or purchase of your property.
FINTRAC can issue administrative monetary penalties to your broker if they do not comply with the law. FINTRAC may also communicate cases of non-compliance to law enforcement authorities that may expose your broker to criminal sanctions, including a maximum fine of $500,000 and/or a five-year prison sentence for not respecting requirements regarding record keeping and identity verification.