Due to the real estate sector's size, its services, and the high monetary values involved, real estate is at risk of being targeted for money laundering - as are banks and financial sectors where large transactions are common. One important way a real estate brokerage can reduce this risk is by regularly conducting an assessment to identify the factors that could expose them to this kind of crime.
Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the Financial Transactions and Reports Analysis Centre of Canada Risk (FINTRAC) requires each real estate brokerage to conduct an assessment and documentation of risks related to money laundering and terrorist financing, as well as mitigation measures to deal with those risks, and review it at least every two years or sooner, if risk factors change.
While there are specific legal requirements of brokerages around managing the risk of money laundering, REALTORS® also have an important role to play in combatting money laundering.
The Centre assists in the detection, prevention and deterrence of money laundering and the financing of terrorist activities. FINTRAC's financial intelligence and compliance functions are a unique contribution to the safety of Canadians and the protection of the integrity of Canada's financial system.
FINTRAC acts at arm's length and is independent from the police services, law enforcement agencies and other entities to which it is authorized to disclose financial intelligence. It reports to the Minister of Finance, who is in turn accountable to Parliament for the activities of the Centre.
FINTRAC was established by, and operates within the ambit of, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations. The Centre is one of several domestic partners in Canada’s anti-money laundering and anti-terrorist financing (AML/ATF) regime, which is led by the Department of Finance.
How do we verify the identity of an individual?
There are three ways that you can verify the identity of an individual:
When an individual is not physically present, you must still determine if the individual presenting the government-issued photo identification document matches the name and photo of the person in the authenticated document provided. For example:
An individual could participate in a live video chat session and you, as the RE, would then be able to compare the name and the features of the live video image to the name and photo on the authentic government-issued photo identification document; or
An individual could be asked to take a "selfie" photo using the camera on their mobile phone or electronic device, and an application used by you, as the RE, would apply facial recognition technology to compare the features of that "selfie" to the photo on the authentic government-issued photo identification document. A process would have to exist to also compare the name on the government-issued photo identification document with the name provided to you, as the RE, by the individual.