On December 14, 2006, Bill C-25 (the "Bill") received
Royal Assent. The Bill is intended to bolster the Proceeds of Crime
(Money Laundering) and Terrorist Financing Act (the
"Act") and harmonize it with current international
standards as well as with the recommendations of the
intergovernmental Financial Action Task Force on Money
The Bill's provisions have come into force in phases over
2008 and 2009. In particular, as of February 20, 2009, real estate
developers are subject to this regime as reporting entities.
The Act and its regulations require such entities to create a
compliance regime, identify clients, keep specified records, and
make reports concerning certain transactions to the Financial
Transactions and Reports Analysis Centre of Canada
Real estate developers are subject to the Act's obligations
when engaging in activities relating to the sale of a new house, a
new condominium unit, a new commercial or industrial building or a
new multi-unit residential building. In such a case, the developer
Keep a client information record;
Identify the client; and
Determine if there is any third party involved in the
transaction and keep a record about such determination.
Once the developer receives funds pursuant to a sale of the
specified property, it must:
Keep a receipt of funds record; and
Identify the individual who provides the funds and confirm the
existence of the client (if it is an entity).
If the sale of the specified property involves $10,000 or more
in cash, the developer must also:
Keep a large cash transaction record;
Identify the individual who hands over the cash;
Determine if there is any third party involved and keep a
record about such determination; and
Send a large cash transaction report to FINTRAC.
Additionally, in the case of suspicious transactions, the real
estate developer must:
Identify the individual who completed the transaction, if not
already done; and
Send a suspicious transaction report to FINTRAC (whether the
suspicious transaction was completed or not).
Records must be kept for a minimum of five years from the date
they were created. For client information records and records to
confirm the existence of an entity, more particularly, these
records have to be kept for five years from the day the last
business transaction was conducted, and in the case of a copy of a
suspicious transaction report, the record has to be kept for a
period of at least five years following the date the report was
It should be noted that certain exceptions to these obligations
are carved out. For example, if a real estate broker or sales
representative is hired to act as the developer's agent, the
obligations described herein do not apply to the developer, but
instead to the broker or sales representative, unless the broker or
sales representative is the developer's employee.
Moreover, the real estate developer needn't keep such
records described above if it conducts a transaction for a public
body (ie: a provincial or federal department or Crown agency, an
incorporated municipal body or a hospital authority) or a very
large corporation (ie: a corporation owning $75 million or more in
net assets and the shares of which are traded on a designated stock
exchange). The same is true regarding a subsidiary of either of
those entities, if the financial statements of the subsidiary are
consolidated with those of the public body or very large
Penalties for Non-Compliance
Failure to comply with these record keeping, client
identification or reporting requirements can lead to criminal
charges, conviction for which could result in up to five years
imprisonment, a fine of $500,000, or both.
Additionally, a new administrative monetary penalty scheme
allows for penalties that could range from $1 to $500,000 depending
on the gravity of the violation.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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