Finance Minister Jim Flaherty has announced changes to Canada's anti-money laundering legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PC(ML)TFA). The changes will have an impact on how real estate transactions are conducted in Canada. Real estate professionals should be aware of these new rules and what is expected of them when handling transactions.

The forthcoming amendments will add to existing requirements for the real estate sector, building on obligations that have been in place since 2001. The most significant changes, coming on June 23, 2008, will require that you identify your clients keep a client identification / receipt of funds record for every real estate transaction and report attempted suspicious transactions.

The government has also announced its intention to include real estate developers in future regulations, subjecting them to many of the same rules that apply to real estate brokers and sales representatives. The details regarding obligations for real estate developers will be outlined in future regulations.

Record-Keeping
In addition to your existing requirements under the PC(ML)TFA, once the changes come into effect on June 23, 2008, you will also have to keep a client information record for every purchase or sale of real estate. A client information record will set out your client's name, address, date of birth and the nature of the client's principal business or occupation.
This information can be recorded on the People screen of your Trades (2.1).

If the client is a corporation, you will also need to keep a copy of the part of the official corporate records showing the provisions relating to the power to bind the corporation regarding the transaction. This can be setup as a File Requirement (I.3.5), and reviewed and e-mailed to your agents in the Track File Requirements options (2.2).

Identifying Your Clients
Currently, if you have identified an individual before, you do not have to do so again if you recognize the individual. Once the changes come into effect, if you have doubts about the information collected concerning an individual’s previous identification, you will have to identify that individual again. If the parties in the transaction are each represented by a different real estate broker or sales representative, you will have to identify the individual or confirm the existence of the entity that you represent in the transaction.
If some parties in a real estate transaction are not represented by a real estate broker or sales representative while other parties are, each real estate broker or sales representative that represents a party to the transaction will have to identify or confirm the existence of the parties that are not represented.

A Contact Management ancillary program will be available to store purchasers and sellers in a separate database.

Third Party Determination
A third party determination will still have to be made when you receive an amount of cash of $10,000 or more and whenever you create a client information / receipt of funds record.
Is the client acting for a third party? This question is the key consideration in making the third party determination.

We strongly recommend that all Canadian companies visit the FINTRAC site for information on the requirements and reporting responsibilities:
http://www.fintrac.gc.ca/re-ed/sc/re-cai-eng.asp