New FINTRAC Rules for Real Estate Developers
Filed Under Kahane Law, Real Estate General, Real Estate Law · Tagged: Canada, Developers, FINTRAC, law, lawyers, money laundering, real estate, terrorist financing
On February 20, 2009, an amendment to regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2000, c.17 (the “Act”) comes into force. This change now includes “real estate developers” as part of the group of financial service providers and financial intermediaries that must meet the reporting and record-keeping requirements described in the Act.
When a real estate developer sells a new building, which includes houses and condos, they must comply with the specific requirements under two regulations under the Act (the “Regulations”):
1. Under the Regulations, they must report ‘suspicious transactions’ to FINTRAC. ‘Suspicious transactions’ are transactions that are in progress or have been completed in which there are reasonable grounds to suspect that that money involved in the transaction stems from a money laundering offense, which can include a terrorist activity financing.
2. Under the Regulations, the developer must:
• Maintain a ‘receipt of funds record’ for funds received in the course of a transaction (subject to certain exceptions);
• Maintain a ‘client information record’ for every client;
• Follow specific procedures for determining the identity of every person who conducts the transaction and every corporation (including the names of their directors);
• Submit a ‘large cash transaction report’ to FINTRAC when the developer or its solicitor receives $10,000 or more in cash; and
• Report any transactions involving known terrorists or terrorist property.
FINTRAC has the authority to make inquiries into the real estate developer’s business and obtain documents or other information from the developer’s records for compliance purposes. The consequences of not complying with the requirement to report to FINTRAC involve criminal penalties and, depending on the offense, could result in a fine, imprisonment, or both. The maximum financial penalty amount that can be imposed for violations classified as very serious is, in the case of an entity, $500,000 and in the case of a person, $100,000.
If you have questions contact Jeff Kahane at Ask Gurus, or www.kahanelaw.com
