Posted on by Marion Anderson

FINTRAC

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What is FINTRAC?

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit. Most countries have their own version of FINTRAC. Their mandate is to prevent and deter money laundering and terrorist financing. To meet this objective, all real estate agents are legally bound to verify the identity of their clients and unrepresented parties in a real estate transaction. It is expected that this verification occur at the start of their relationship. No one buying or selling real estate is exempt from FINTRAC. Every real estate agent has a legal obligation to complete the FINTRAC forms and ask their clients questions as to the source of the funds.

Your Realtor’s Obligations

Your realtor now has a legal obligation to verify the identity of their clients when they first meet with a potential buyer or seller. In addition, the Buyer’s realtor is legally obligated to ask the Buyer about the source of the Buyer’s funds. Most real estate agents do not relish wearing the FINTRAC inspector’s hat. However, neither the real estate agent nor the real estate brokerage will survive the hefty fines imposed should the FINTRAC process not be upheld according to FINTRAC’s standards. FINTRAC takes the brokerage’s role in collecting this data very seriously. An annual audit of the real estate brokerage to view their FINTRAC documents is expected and each brokerage must have a designated Compliance Officer on staff.

In 2024 FINTRAC introduced a dual ID process including:

  1. At the start of the relationship, your realtor will ask each Buyer to provide a piece of government-issued photo identification that includes each Buyer’s full name, plus government-issued photo identification. This can be a passport or driver’s license. It is better to provide both of those, then your realtor does not have to ask for bank account information or proof of your address to complete the FINTRACT receipt of funds document.
  2. Your realtor will need to know your occupation. Sutton Group-West Coast Realty also requires the name of your employer. If you are retired, the last occupation and employer will be required. This provides an extra layer of information should FINTRAC do an annual audit on a buyer or seller.
  3. If you are representing a corporation your agent will require you to provide information such as a certificate of incorporation. This information will be recorded on the FINTRAC form and will include the corporation’s name, address, and names of the directors. The corporate documentation is in addition to the personal information required. For example, if the husband and wife are directors of the company, and the house is going to be in the wife’s name, an Individual FINTRAC form will be completed for the husband, and wife, in addition to FINTRAC for the corporation.

Third Party Involvement

The following are examples of a third party:

  1. When the deposit comes out of a corporate account when the property will be in the husband and wife’s names, a third party (corporation) is now involved.
  2. If a generous aunt has offered to pay the deposit, it may be prudent to ask her to deposit the funds into the Buyer’s personal account before sending the deposit. This way the funds come from the buyer whose name will be on the title and not a Third Party (the aunt). If the aunt wants to send the deposit, she is now a Third Party. This means that the aunt will need to provide two pieces of government ID plus occupation and title. In other words, the aunt will need to be verified. If the aunt lives in another country, a notary may be involved to secure the aunt’s identification.
  3. When a buyer who is a student is buying a multi-million dollar property, this raises the question that the realtor must ask, “What is the source of these funds?” In other words, where did you get the money to buy this type of property? There may be a perfectly reasonable answer, but these questions must be asked, answered and documented on the FINTRAC form.

It is easy to understand why each real estate brokerage needs a Compliance Officer to keep all their real estate agents on track.

Receipt of Funds

Photo ID taken at the start of the relationship. However, more verification is required when the Buyer sends the deposit to the Buyer’s brokerage trust account, for example:

  1. A second source of ID might be a utility bill that states your name and home address, or a bank statement. The address on the statement should be the same as the address on the Contract of Purchase and Sale. If you provided your passport for the photo ID, you can now provide your driver’s license for the second piece of ID. Your agent will record this information on a FINTRAC form that will be kept confidential in their brokerage in preparation for the annual FINTRAC audit. All information you provide to your agent will be uploaded to the brokerage’s cloud and then deleted from the agent’s computer.
  2. When the buyer sends in the deposit, the buyer must send their agent proof of the deposit. Typically this proof will have an account number and that will also be entered into the FINTRAC form. If there was no account number on the proof then your realtor will also ask you for the account number and type of account the funds came from. You do not have to give this information, but the realtor is legally obliged to ask you for it and document your response. Note: it is the realtor’s legal obligation to ask where the funds came from.

Depending on your circumstances, there may be additional information required by your realtor before they can assist you in the purchase or sale of real estate.

Confidentiality

Like all aspects of your real estate transactions, your agent’s obligations to you are governed by the Real Estate Services Act and its Rules. Within those Rules is the duty to always maintain the confidentiality of information respecting a client. This means, that other than when required by law, your agent will keep all personal information about you confidential in perpetuity.

BCFSA

The majority of the content for this post was taken from the British Columbia Financial Services Authority (BCFSA) website. BC Financial Services Authority regulates and oversees important financial transactions in British Columbia to ensure fairness, legality, and the prosperity of consumers and the province. In other words, the BCFSA is the governing body of all real estate agents in BC.

Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. It sets international standards that aim to prevent these illegal activities and the harm they cause to society. Find out more about the issues that the FATF is working on. The FATF was formed in 2000 to combat money laundering and illicit funds moving between countries. FINTRAC is not a Canada only solution, the FATF member countries are from around the globe.

Next Steps

If you think I would be a good fit to work with you and your family, and you are not already working with a Whistler realtor, please contact me. I look forward to hearing from you.

It’s a Good Life in Whistler!

Marion

Marion Anderson Personal Real Estate Corporation

marion@WhistlerSkiinSkiout.com (604) 938-3885