Are you complying with anti-money laundering laws?

This spring, an investigation by the Canadian Press found that according to government records, many real estate brokerages in Canada did not have a full compliance regime in place to detect and report money laundering, terrorist financing and other suspicious transactions.

Since 2001, federal law (Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Act, or PCMLTFA) has set requirements for real estate and other sectors.

It’s important to note that RECO doesn’t enforce these regulations. The PCMLTFA is enforced by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

 

Requirements for individuals

Under PCMLTFA, individual brokers and salespersons have an obligation to report when they suspect that a transaction, or an attempted transaction, is related to money laundering or terrorist activity financing. FINTRAC offers key information on identifying and reporting suspicious transactions.

 

Requirements for brokerages

Other than the reporting requirements, the PCMLTFA primarily applies to brokerages, which must implement a compliance regime to identify and prevent money laundering.  As part of their compliance regime, brokerages must take measures that include appointing a compliance officer, creating and enforcing policies, training employees, and more.

To confirm that a brokerage is complying with the law, FINTRAC can require a brokerage to complete a compliance assessment report. FINTRAC may also ask questions and examine brokerage records.

So how can a Broker of Record make sure their brokerage is compliant? FINTRAC offers a great deal of information that is extremely useful. Ultimately, the Broker of Record should seek legal advice if they need further guidance.

The consequences for failing to comply are serious. For example, failure to meet the record keeping requirements could result in criminal charges from FINTRAC, with fines of up to $500,000 and up to five years of imprisonment.

REBBA 2002 requires registrants to conduct themselves with integrity and abide by all other laws and regulations that impact their business. Failing to do so could lead to regulatory action from RECO, including discipline under the Code of Ethics or loss of registration.

There’s more to running a brokerage than REBBA 2002. Money laundering regulations are important, and all brokerages should take compliance seriously.


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