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.
Your REALTOR® requires this identification information to comply with the law. It is the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) that requires financial institutions and real estate agents, among other professionals and services covered by the legislation, to identify customers who conduct financial transactions.
These include depositing funds or buying and selling real estate. The Act also requires real estate agents to keep these identification records for five years.
Canada has had substantial anti-money laundering and terrorist financing legislation since 2001. Since then REALTORS® have had a legal responsibility in Canada’s efforts to combat money laundering and terrorist financing, by reporting any cash transactions of $10,000 or more, or reporting suspicious real estate transactions.
Those original legal requirements still exist but under these new regulations, REALTORS® must now document personal information and proof of the identity of their client in each and every transaction, including occupation. If the client is a corporation, REALTORS® must obtain official corporate documents, and the names of directors. If the buyer or seller is in another city, province or country and no in-person meeting is held, REALTORS® must now use an agent or “mandatary” to identify third parties.
The new compliance requirements effect even a buyer or seller not using the services of a licensed real estate practitioner.
If there is a real estate agent involved in the transaction, they are also required by law to now verify that private buyer or seller’s information as well.
REALTORS® must also complete a report for ALL funds they receive during the real estate transaction, not just those of $10,000 or more.