5 Top FINTRAC Principles for Real Estate Brokerages
Based on my completed audits of the FINTRAC Policies and Procedures of Real Estate Brokerages across Canada in 2024, I have noted the following important principles that will assist a brokerage to comply with any FINTRAC audit.
1. Section A on the FINTRAC form showing the occupation of the client should always be completed in detail as this demonstrates how the client is connected to their community. This is one of the main criteria that is reviewed by a FINTRAC auditor. For example, do not use terms such as “Software developer, IT worker” alone. Also include the name of the company they work for as well. Even if the client is retired, insert what their occupation was before retirement. When a client is connected to their community, they are not laundering money.
2. When you complete section C of the new CREA forms, think like a Landlord qualifying a proposed tenant. You know the grief a landlord suffers when they do not properly qualify a tenant. You need to understand the grief you will face if you are dealing with anyone suspicious as your client. One negative client story with you and a suspicious client on the internet will follow you for years and seriously impact your own brand image.
3. Be able to “Tell a story” for every new client that answers the following questions:
- How was the client referred to you? (relative, co-worker of prior client)
- What is the purpose of the transaction? (First home)
- Where is the down payment coming from? (Savings, sale of current home)
When you have a good story, it helps explain any issue that may arise later, for example the client is afraid to give their bank account information for the deposit.
4. Do extra homework for every buyer or seller that is a corporation, to make sure you are also asking about the people who actually own the corporation, namely, the shareholders.
5. Remember that even if a transaction has to be reported as suspicious, this does not mean you must in any way forfeit your commission or cancel the transaction. FINTRAC gathers information and shares it with other databases, included those filed by banks, wealth managers and other professionals. All reports are kept confidential.
My own external audit will review and assist you with your own FINRAC policy, risk assessment and training materials and will also demonstrate that by following proper FINTRAC principles, your agents will not only comply with FINTRAC, stay out of trouble and actually make more money this year as well. If you have any questions, please call me directly at 416-702-2499, or at [email protected] for further information.
