As many REALTORS® are aware, significant modifications to Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (also known as the FINTRAC Regime) came into force on June 1, 2021. Key changes include:
- A new obligation to determine whether a client is a politically exposed person (commonly referred to as a “PEP”) or head of an international organization;
- A new obligation to obtain beneficial ownership information from corporate and other entity clients;
- A new obligation to report large virtual currency transactions; and
- A change as to what constitutes a “business relationship” under the law.
In addition to many smaller changes.
At first glance, these updates can seem intimidating. But before you go running for the hills, its important to take stock of what tools exist to help you get a handle on them.
What resources are available?
First, as a REALTOR® you have access to REALTOR Link®. On this site, members will find a template office policy manual, FAQs and two new forms that can be used as a step-by-step guide to walk members through their PEP and beneficial ownership obligations. Other resources include a brochure REALTORS® can use to explain to their clients why they require sensitive client information in order to comply with the law, a video, which summarizes the basics of the FINTRAC Regime, and a document produced by FINTRAC explaining the key changes.
Second, REALTORS® and brokerage staff who require more in-depth knowledge of the law should review the detailed guidance FINTRAC has produced on its website. This includes:
- Beneficial ownership requirements;
- Politically exposed persons and heads of international organizations guidance for non-account-based reporting entity sectors; and
- Frequently asked questions about domestic politically exposed persons and heads of international organizations.
Third, FINTRAC offers a helpful policy interpretation service that provides more detailed and technical interpretations about specific aspects of the law. They won’t provide legal advice, but they can go a long way in pointing you in the right direction. To request a policy interpretation you can contact FINTRAC at email@example.com.
Returning to the recent changes in the law, it’s important to note FINTRAC has announced that until March 31, 2022, FINTRAC will be focusing its examination activities (i.e. audits) on assessing compliance with regulatory requirements that were in effect prior to June 1, 2021. This means although REALTORS® are still required to comply with the new obligations, and should make good faith efforts to do so, the likelihood of an administrative monetary penalty being levied if a deficiency is found with respect to the new obligations appears to be significantly lower.
Does this mean that the new changes are a walk-in-the park? No. REALTORS®, whether they are brokers or sales representatives, will have to work hard to make sure they understand what is now expected of them going forward. But hopefully these tools, and FINTRAC’s recent announcements, will give REALTORS® some comfort as they familiarize themselves with their new obligations.
The article above is for information purposes and is not legal advice or a substitute for legal counsel.