For several years now, brokers have been obligated to comply with the Proceeds of Crime (Money Laundering) and Terrorist Act and regulations (a.k.a. the “FINTRAC regime”). While always challenging, changes to the regulations and FINTRAC’s guidelines in 2014 had the potential to place an even greater administrative and record-creation burden on REALTORS®. However, as a result of three years of sustained lobbying by CREA, this paperwork burden was significantly reduced and important changes regarding flexibility and discretion were restored.
Now, to further assist brokers in meeting their training program obligations, on August 24, 2015, we released an update to our template compliance manual that provides more detail on how to design a FINTRAC training regime. Included in the update is a new worksheet that can be used to document what training will be provided, who will take the training, and the frequency in which training will be provided.
For additional information, members can also consult FINTRAC’s online guidelines, which provide detail with respect to the basic elements that make up a compliance regime, including:
- The appointment of a compliance officer;
- The development and application of written policies and procedures;
- A risk assessment of risks to the brokerage related to money laundering and terrorist financing, as well as the documentation and implementation of mitigation measures to deal with those risks;
- A training program for all employees, salespersons or other individuals authorized to act on the brokerage’s behalf; and
- A review of the compliance policies and procedures, assessment of risks related to money laundering and terrorist financing and training program, every two years.
Failure to comply with these guidelines can make for an unpleasant surprise should the brokerage be examined by FINTRAC. For that reason it is always a good idea for brokers (and compliance officers) to occasionally refresh themselves on these guidelines in order to dispel any misconceptions they may have. Take the training program element, for example. Did you know that:
- The training program must be in writing.
- The training program must be maintained.
- Individuals with responsibilities under a brokerage’s compliance regime should receive training.
- New staff should be trained before they deal with clients.
- Those who complete the training should have an understanding of certain foundational training (e. information about the FINTRAC regime, basic reporting, client ID and record keeping requirements, etc.) as well as brokerage-specific training.
This means, for example, that it is not sufficient for brokers to send salespersons away on a training course without documenting that the training has occurred. Similarly, brokers whose training program incorporates a course that explains the law in detail but fails to train salespersons on how basic client ID and record keeping occurs at the brokerage itself, will likely be found to be deficient should FINTRAC come knocking.
The new materials also explain how brokers who wish to incorporate REvia’s Complying with Anti-money Laundering and Counter-terrorist Financing Obligations course into their training materials may do so in light of their brokerage-specific training. Of course, brokers are free to continue to rely on their own training programs. But even brokers who are confident that their existing training program is sufficient may find some value in comparing their existing program to the worksheet to see whether any omissions in the existing program are apparent. In the FINTRAC world, as with many things in life, it never hurts to be thorough.
The article above is for information purposes and is not legal advice or a substitute for legal counsel.