In recent weeks, news headlines revealed that the Vancouver real
estate sector is currently the focus of a Financial Transactions
and Reports Analysis Centre of Canada (FINTRAC) anti-money
laundering audit that has already been underway for several months.
According to reports, the increased scrutiny is justified by
FINTRAC risk analyses indicating that the real estate sector has a
relatively high risk of money laundering when compared to other
sectors that are subject to the federal government's anti-money
laundering legislation. This has raised compliance concerns and
questions from real estate developers.
The Proceeds of Crime (Money Laundering) and Terrorist
Financing Regulations (Regulations) impose identity
verification, record keeping, monitoring and reporting requirements
on developers when they sell new real estate to the public.
According to the FINTRAC guidelines, developers are exempt from
these requirements for every sale they conduct through a licensed
broker or sales representative contracted to act on their behalf as
long as that broker or sales representative is not acting as an
employee of the developer. However, every developer that has sold
at least 5 new houses, condos, or other equivalent property since
2007 must establish a compliance program and appoint a compliance
officer to oversee that program even if they plan to conduct all of
their sales through licensed brokers and sales representatives.
Compliance program requirements under the Regulations include the
establishment of anti-money laundering policies and procedures,
regular review of compliance efforts, on-going risk assessment, and
training for employees, agents and others acting on behalf of the
Amendments to the Regulations were proposed by the Department of
Finance on June 18, 2015 and are still undergoing review. If
enacted without change, these amendments would modify client
identification, reporting, and record keeping requirements, add
risk assessment criteria, and incorporate changes that better
facilitate the use of online technologies, among other changes.
More information about the proposed amendments can be found at: http://gazette.gc.ca/rp-pr/p1/2015/2015-07-04/html/reg2-eng.php.
In order to assist developers with meeting their FINTRAC
obligations, we have developed a FINTRAC compliance manual setting
out those obligations along with suggested policies and procedures,
forms, templates and other useful resources. Please contact a
member of our Real Property and Planning group for further
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