On June 23rd, 2008, new federal money laundering and anti-terrorist financing regulations came into effect that require real estate agents and brokers to collect personal identification information from buyers and sellers.
While Bill C-25 is Canada's newest legislative initiative to curtail money laundering and terrorist financing, there is a legislation since 2001 that required designated industries in Canada (including real estate) to report suspicious transactions and large cash transactions of $10,000 or more.
Money laundering is the process used to disguise the source of money or assets derived from criminal activity. This illegal activity can include drug trafficking, smuggling, fraud, extortion and corruption. Criminals must launder the profits and proceeds from these crimes to be able to enjoy them. The scope of criminal proceeds is significant; the International Monetary Fund (IMF) estimated that some $500 billion (US) is laundering worldwide each year.
Terrorist financing operates somewhat differently from money laundering. While terrorist group do generate funds from criminal activities such as drug trafficking and arms smuggling, they also obtain revenue through legal means. Supporters of terrorist causes may, for example, raise funds from their local communities by hosting events or membership drives. In addition, some charity or relief organizations may unknowingly become the route where donors contribute funds that may eventually be used to commit a terrorist act.
How does FINTRAC assist law enforcement and security agencies?
The Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, collects, analyzes and discloses financial information and intelligence on suspected money laundering and terrorist financing activities. It was created as part of a Canadian government initiative to fight money laundering and terrorist financing. Although it operates at arm's length from law enforcement, FINTRAC's primary role is to provide law enforcement agencies with information to help them with their investigations.
FINTRAC is required by law to protect the personal information it receives from unauthorized disclosure.
Who must report to FINTRAC?
The following persons and entities must report suspicious and certain other transactions to FINTRAC:
- real estate brokers and agents;
- financial entities including banks, credit unions, trust and loan companies and agents of the Crown that accept deposits liabilities;
- life insurance companies, brokers or agents;
- securities dealers, portfolio managers and investment counselors who are provincially authorized;
- persons engaged in the business of foreign exchange dealing;
- money services businesses;
- accountants and accounting firms when carrying out certain activities on behalf of their clients;
- casinos; and
- individuals and any entity importing or exporting currency or money instruments (such as money order) of $10,000 or more.
Additional information about tis federal initiative, the federal legislation, and the role of FINTRAC in the reporting system is available at www.fintrac-canafe.gc.ca