Canada: The Real Estate Developer And "Proceeds Of Crime (Money Laundering) And Terrorist Financing Act" (Canada)

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)1 (the "Act") was enacted in 2000 to detect, deter and otherwise address activities that include money laundering and financing terrorist activities. The Act is applicable to specific businesses, professions and activities that are considered susceptible to being used for money laundering and financing terrorist activities.2

The Act is administered by the Ministry of Finance of Canada, however the Financial Transactions and Reports Analysis Center of Canada ("FINTRAC") is Canada's financial intelligence unit and is responsible for ensuring that all reporting entities comply with the record keeping and reporting requirements under the Act. FINTRAC reports to the Minister of Finance and provides information to CSIS, the Government of Canada's primary intelligence gathering entity.

Applicability To Real Estate Developers

Effective February 20, 2009, the provisions of the Act were expanded to include "Real Estate Developers", which term is defined in the Act as an individual or entity that, in any calendar year after 2007, has sold one of the following to the public:

  • At least five new houses or condominium units;
  • At least one new commercial or industrial building;
  • At least one new multi-unit residential building, each of which contains five or more residential units; or
  • At least two new multi-unit residential buildings that together contain five or more residential units.

For the purposes of this Bulletin, entities that come within this definition are referred to as "RED". Once an entity becomes a RED, that entity will remain a RED until there is a substantial and permanent change to the entity's operation. The reporting and record keeping requirements, discussed in more detail below, will apply to the RED from the day it qualifies as a RED under the Act.

Real Estate Agent/Broker Exception

The record keeping and reporting requirements set out in the Act will not be applicable to a RED where a licensed real estate agent or broker (the "Agent") acts as a sales representative for the RED and the Agent is not an employee of the RED. There are separate provisions under the Act with respect to record keeping and reporting requirements applicable to Agents. If the Agent is an employee of the RED, then the obligations to keep records and report under the Act are applicable to the RED.

Reporting To FINTRAC

All REDs must submit Suspicious Transaction Reports, Terrorist Property Reports and Large Cash Transaction Reports to FINTRAC on the occurrence of certain events, set out in more detail below. These reports are submitted electronically to FINTRAC. Additional information regarding the frequency, form and content of the reports is available from FINTRAC on-line3.

Suspicious Transaction Report

Where there are reasonable grounds4 to suspect that a transaction or an attempted transaction is related to a money laundering or terrorist financing activity, a report must be submitted to FINTRAC within thirty days.

Terrorist Property Report

Where the RED knows or believes that there is property5 in its possession or control that is owned or controlled by or on behalf of a terrorist or terrorist group6, a report must be sent immediately to FINTRAC.

Large Cash Transaction Report

Any receipt by a RED of cash7 in the amount of $10,000 or more in the course of a single transaction, or cash amounts of less than $10,000 from the same person or entity within a 24-hour period and the cash amounts received by a RED within that 24-hour period total at least $10,000, is classified as a Large Cash Transaction ("LCT") and must be reported to FINTRAC, within 15 days after receipt of the LCT.

Record Keeping Requirements

In addition to the reporting requirements outlined above, the Act requires that the RED keep the following records with respect to specified transactions:

Receipt Of Funds Record

Where the RED received funds in any form, a receipt of funds record must be kept by the RED and should include the following:

  • amount and currency of cash received;
  • name, date of birth, address and principal business or occupation of individual from whom cash is received;
  • date of transaction;
  • purpose, details and type of transaction, including the above noted information of any other individuals involved in the transaction;
  • if the funds were received in cash, details of how the cash was received; and
  • if an account was affected by the transaction, including the account number and type, name of account holder and currency type of account.

Client Information Record

A client information record must be kept by the RED for each transaction described in the definition of a RED set out above. The client information record must include the name, address and nature of the client's principal business or occupation.

For individuals, the client information record should also include the date of birth of the client. Where the client is a corporation, evidence from the official corporate records of the company showing which of the officers have the power to bind the corporation must be collected. This evidence could be in the form of a certificate of incumbency, articles of incorporation or by-laws of the corporation. Note that where there is more than one individual or corporation purchasing, a separate client information record must be kept for each purchaser.

LCT Record

Where cash in the amount of $10,000 or more is received by the RED, a LCT record must be maintained, in addition to the LCT Report submitted to FINTRAC discussed above. The record must contain the amount of cash received, the date of the transaction, the account number of the affected account and the name, address and birth date and occupation of the individual from whom the amount is received or corporate records of the company, as described above.

These records are not submitted to FINTRAC, but must be maintained by the RED for a period of at least five years and must be in a form that can be easily converted into a paper copy.

Compliance Regime

Each RED is required to implement a compliance regime8, which will be tailored to fit the nature, size and complexity of the operation of the RED, but must include the following:

appointment of compliance officer;

  • development and application of compliance policies and procedures;
  • an assessment and documentation of risks related to money laundering and terrorist financing;
  • on-going training programme; and
  • review of compliance policies and procedure to test effectiveness.

Penalties For Non-Compliance

Under the Act, FINTRAC has the authority to examine records and the compliance regime of any RED. Criminal or administrative penalties can be issued against a RED for noncompliance with the Act. Criminal penalties include the following:

Non-Compliant Action


failure to Report Suspicious Transaction or Terrorist Property Report

up to $2 million and/or 5 years imprisonment

failure to report LCT

up to $500,000 for first offence, $1 million for subsequent offences

failure to meet record keeping requirements

up to $500,000 and/or 5 years imprisonment

failure to implement compliance regime

up to $500,000 and/or 5 years imprisonment

As of December 30, 2008, FINTRAC is authorized to issue administrative penalties for noncompliance with the Act including the following:

Non-Compliant Action


failure to implement compliance regime

up to $100,000 for each violation

failure to provide review to senior management within 30 days

up to $100,000 for each violation

failure to meet record keeping requirements, monitor and mitigate risk

up to $100,000 for each violation

Next Steps For RED

The reporting and record keeping requirements under the Act are applicable to all REDs as of February 20, 2009. REDs should contact FINTRAC to enroll for access to the FINTRAC electronic reporting system.9 REDs should also ensure that internal policies and procedures are in place with respect to implementing a compliance regime and complying with the reporting and record keeping requirements under the Act.


1. S.C. 2000, c. 17.

2. Guideline 1: Backgrounder,

3. See Guideline 2: Suspicious Transactions for more details on Suspicious Transactions Reports; See Guideline 5: Submitting Terrorist Property Reports to FINTRAC for more details on Terrorist Property Reports; See Guideline 7: Submitting Large Cash Transaction Reports for more details on Large Cash Transaction Reports (

4. " 'Reasonable Grounds to Suspect' is determined by what is reasonable in your circumstances, including normal business practices and systems within your industry". See section 3 of Guideline 2: Suspicious Transactions for more details on Suspicious Transactions Reports.

5. "property" means real or personal property in the possession or control of the RED and includes cash, bank accounts, insurance policies, money orders, real estate, securities and traveller's cheques. See Guideline 5: Submitting Terrorist Property Reports to FINTRAC at for more details.

6. Refer to section 3 of Guideline 5: Submitting Terrorist Property Reports to FINTRAC at for a definition of terrorist groups.

7. "Cash" means coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada pursuant to the Bank of Canada Act that are intended for circulation in Canada or coins or bank notes of countries other than Canada. See section 1(1), Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2002-184, as amended.

8. See Guideline 4: Implementation of a Compliance Regime at

9. FINTRAC can be contacted at 1.866.346.8722.

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.

© Copyright 2009 McMillan LLP

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions