CREA Updates FINTRAC Materials to Help Ensure Compliance

As you may be aware, CREA recently updated its anti-money laundering (a.k.a. FINTRAC) compliance resources. I thought I would take a moment to answer two questions: (i) why now; and (ii) what’s changed.

Why make changes now?

Unlike most changes to CREA’s materials, the most recent updates weren’t primarily prompted by a change in the law. Instead, they’re an attempt to head off an anticipated uptick of compliance activity that we see coming.

This is due to a conflux of trends that seem to be coming together: first, what appears to be an increased focus by FINTRAC on ensuring the effectiveness of brokerage compliance regimes under the law; second, an apparent increased willingness by FINTRAC to levy administrative monetary penalties (a.k.a. fines). Did you know that FINTRAC handed out the largest ever fine ($7.475 million) just this past December? Although that fine was issued against a bank, six-figure fines were also levied against real estate brokerages in 2023.

Another reason why CREA’s materials changed is my own experience while working at FINTRAC. That’s right, for almost a year, yours truly was on interchange at FINTRAC where I gained practical insight on where REALTORS® are struggling with the law. Knowing this, and the compliance storm we see coming, we reviewed and updated our materials to give REALTORS® the best tools they need.

Updates to CREA’s FINTRAC Regime Materials Webinar

So, what are the changes?

Well, most of the changes to CREA’s resources are very minor. For example, the only substantive change to the politically exposed person form is replacing “Her Majesty” with “His Majesty” to reflect the fact that Canada has a new monarch. CREA also:

  • Added a version number to all forms.
  • Replaced references to CREA’s REALTOR Link® site with “Member Portal”.
  • Modernized language throughout our materials to reflect FINTRAC’s current guidance, website URLs and terminology.
  • Updated our brochure to reflect new sectors covered by the law (e.g. armoured cars).

These changes are unlikely to have any noticeable impact on you.

More significant are changes to three CREA forms you may encounter in your day-to-day business: ID forms, receipt of funds, and brokerage risk assessment. A few words on each of these changes:

  1. Brokerage Risk Assessment: the revised form is intended to mirror FINTRAC’s Risk Assessed Guidance using plain language that REALTORS® are familiar with. The key point to remember is that sales representatives do not need to complete this form.
  2. Receipt of Funds record: the revised form is longer. However, this is effectively a design change. Previously, REALTORS® were instructed to fill out two forms: one for the funds, one for the person(s) providing the funds. Now REALTORS® only need to fill out one form. However, the information you need to obtain is identical.
  3. The Client Risk portion of ID forms: this has changed significantly. REALTORS® have long been required to risk-rate their clients. The old process dates back to 2014 and contemplates placing clients in “risk buckets”. However, this has proved difficult to use, especially considering FINTRAC’s expectations – hence the shift to the question/scoring approach. The key point to remember is that the purpose of scoring is to identify high-risk clients so that the brokerage’s high-risk mitigation practices (which a brokerage is required to have) are effectively used. These high-risk mitigation practices, could be, depending on the brokerage, as simple as conducting a Google search on a client.

One last comment: because CREA’s template forms are optional tools only, they don’t have a coming into force date, like legislation. As a result, brokerages are free to decide for themselves when and if they want their sales representatives to use the updated materials. However, considering the trends I noted above, they may wish to make that decision sooner rather than later.

The article above is for information purposes and is not legal advice or a substitute for legal counsel.

Simon Parham is General Counsel and Corporate Secretary at the Canadian Real Estate Association. He has expertise in a variety of federal laws and issues, including anti-money laundering and privacy law. Prior to joining CREA, Simon worked as counsel for the Department of Justice, where he provided legal advice to the Department of National Defence.

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