Money Laundering Legislation (CREA)

2008/09/04 Originally published in the Vernon Morning Star.

This summer saw the implementation of new standards and practices for Realtors® and for buyers and sellers of real estate.

You may or may not know this, but since 2001 Canadian Realtors® have been responsible for reporting suspicious real estate transactions and any cash transactions of $10,000 or more. Now, the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) has made further requirements of Realtors®, financial institutions and others. We are now required to obtain identification on each and every buyer and seller. There are no exceptions, even if we have known that party for a long time. We must also obtain and record both their occupation and birth dates. The new legislation requires that data be kept on file at the concerned real estate office for five years.

This information is not used for any other purpose. It must be stored by the real estate office in a secure manner, electronic or otherwise, and must be available on request to FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada). In the event that the real estate client is a corporation, then the Realtor® must obtain the official corporate documents along with the names of that corporation's directors.

If the buyer or seller is representing a third party, then identification must also be obtained from that third party. Out of town clients must be identified by an approved person in their area. That would be a Realtor® in that local or a mandatary. A mandatary is an agent or representative who has a specific mandate that does not detract from their regular profession. The mandate is usually specified in a service agreement. Even if a Realtor® is involved in a private selling situation, the Realtor® must complete the I.D. process on all parties to the transaction. What kind of I.D. will buyers and sellers have to provide? There is nothing too complicated here. It just needs to be a government issued document, such as a drivers' license, passport or residency card. Never provide your social insurance card or number.

So, why has all this become necessary? It is a concerted effort to try to make money earned in criminal activity harder to conceal. Terrorists, smugglers and drug traffickers often use real estate purchases to "bury" money. Billions of dollars worldwide are laundered annually. It is a massive global problem and Canada must do its part to combat these practices.

Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email her or call 503-3755.

RE/MAX Vernon | 250.503.3755 | Toll free 1.888.503.3755 | 5603 - 27 ST | Vernon | BC | V1T 8Z5 | Canada

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Money Laundering Legislation (CREA)