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1 New obligations for real estate brokers and agents in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

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Presentation on theme: "1 New obligations for real estate brokers and agents in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act."— Presentation transcript:

1 1 New obligations for real estate brokers and agents in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act

2 2 Effective date of amendments to the Act: June 23, 2008

3 3 The Act was amended in December 2006, creating new obligations in the following associated Regulations:  Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations  Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations

4 4 Objectives of the new obligations according to the Act:  Strengthen existing measures designed to combat money laundering and the financing of terrorist activities, and relying on FINTRAC's experience  Improve the ability to detect and deter money laundering and the financing of terrorist activities  Render more difficult the carrying out of illicit transactions

5 5 Chartered or registered real estate brokers and agents are subject to these regulations when they “act as an agent in the purchase or sale of real estate.” The new definition

6 6 In addition to suspicious transactions that have been completed, agents and brokers will now be required to report attempted suspicious transactions to FINTRAC. This means an incomplete transaction that the client intended and, through his/her actions, attempted to conduct. Example of an attempted transaction: A client offers you a large cash deposit on the purchase of a house. When the real estate agent asks him to provide a piece of identification, the client changes his mind and leaves the premises. Changes affecting reporting

7 7 Triggering activities: The receipt of any amount of funds, whether or not it is in cash OR Any purchase or sale of real estate Obligation: For individuals: Verify the identity of each client as well as each individual not represented by a broker or agent. For corporations: Confirm the existence and verify the name and address of the corporation, if applicable, as well as the names of its directors. When: For sellers: upon signing the brokerage contract For buyers: upon submitting an Offer to Purchase Changes affecting client identification

8 8 When all parties are represented by a broker or agent, each broker or agent only has to verify the identify of the party he/she is representing. If one or more parties are not represented, the agent or broker involved in the purchase or sale of the real estate must verify the identities of all non-represented parties. HOWEVER, the agent must always verify the identity of the client from whom he/she receives funds, even if he/she does not represent the client for the purpose of the transaction. Real estate: Triggering activities for client identification (cont’d)

9 9 In the client’s presence, the identification method is to refer to a valid identification document issued by a government agency. For example: driver’s licence, passport or health insurance card. Identification method

10 10 Real estate brokers and agents have to keep a client information record for every purchase or sale of real estate. This record should contain:  The client’s name, address and date of birth;  The nature of the client’s main business or occupation;  If the client is a corporation: a copy of the part of the official corporate records showing the provisions relating to the power to bind the corporation regarding the transaction. Changes affecting record keeping

11 11 For any amount of funds received, whether or not it is in cash, real estate brokers and agents must keep a receipt of funds record, which should contain the following information:  The name, address and date of birth of the individual or entity  The nature of their principal business or occupation  If the client is a corporation: a copy of the part of the official corporate records showing the provisions relating to the power to bind the corporation regarding the transaction  Transaction date  Account number/ account type/ account holder  Transaction details (how the funds were received, in what currency, etc.) Real estate: record keeping and receipt of funds

12 12 Declaring entities are not obliged to keep information that is already available in other records they must keep in accordance with the Act. Effective date: June 30, Record keeping: new exception

13 13 Outils Forms The following forms can be found on RE/MAX Québec’s extranet site:  Client identity verification (individual)  Client identity verification (corporation)  Receipt of funds

14 14 Beginning December 30, 2008, FINTRAC may impose an administrative penalty in case of non-compliance with the Act and its associated Regulations. Administrative penalties

15 15 FINTRAC favours a co-operative approach with respect to the issue of compliance. FINTRAC will continue to provide directives by means of a periodic review of its guidelines. FINTRAC’s approach regarding compliance

16 16 Please consult FINTRAC’s Web site: Or, contact: Catherine Bérard Telephone: FOR MORE INFORMATION


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