7. Reporting certain transactions

Reporting entities

The persons and entities designated as “reporting entities” under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) have certain obligations to abide by. Reporting entities are persons or entities that engage in activities that are susceptible to being used for money laundering or the financing of terrorist activities, such as real estate agencies and brokers.

Licensees are reporting entities given the role they play in the real estate industry.

Licensees are required to complete and submit reports to FINTRAC on certain transactions and assets in accordance with the rules summarized below.  For more information, licensees should visit FINTRAC's website for specific and detailed guidelines in this regard.¹

Suspicious transactions

A suspicious transaction or attempted suspicious transaction must be reported to FINTRAC when the licensee believes that a money laundering offence may have been committed or when there are reasonable grounds to suspect it.

To do this, the licensee must comprehensively assess:

• The "facts" related to the suspicious transaction, i.e., known events, actions, circumstances or elements that exist or happened at a given time                            
  • For example: the date, time, location or amount or type of transaction, account details, business line, client's financial history or information about the person or entity, such as criminal record, etc.
• The "context" of the suspicious transaction, i.e., information that clarifies a set of circumstances or provides an explanation of a situation or financial transaction
• “Money laundering indicators", i.e., potential red flags that could initiate suspicion or indicate something unusual in the absence of a reasonable explanation. Red flags typically stem from one or more factual characteristics, behaviours, patterns or other contextual factors that identify irregularities related to transactions. These often present inconsistencies with what is expected of the client based on what we know about him.

When a licensee detects unusual behaviour or a transaction that requires assessment, the licensee must assess the facts, context and indicators of money laundering.  Identifying and assessing these three elements is essential. A fact, context or indicator taken alone may not raise any doubt, but a money laundering indicator combined with facts and context can be used to determine whether there are "reasonable grounds to suspect" that a money laundering offence has been committed.

The licensee is not required to verify the facts, context or indicators of money laundering that led him to suspect that an offence has been committed, or to prove that a money laundering offence has been committed to conclude that there are reasonable grounds to suspect such an offence. However, suspicion must be reasonable, unbiased and not based on prejudice.

The licensee must submit a complete and accurate Suspicious Transaction Report (STR) to FINTRAC as soon as possible, with utmost priority and in a timely fashion.

The STR must be submitted electronically or on paper.

It must include answers to the following questions:

1. Who are the parties to the transaction?
2. When did the person perform or attempt to perform the transaction? If it was not performed, why?
3. What are the financial instruments or mechanisms used to perform the transaction?
4. Where did the transaction take place?
5. Why is the transaction or attempted transaction related to the commission or attempted commission of a money laundering offence?                           
6. How was the transaction performed?

FINTRAC has developed indicators specific to the real estate industry that licensees must consult in order to recognize, assess and report suspicious financial transactions. Note that this is not an exhaustive list. Also see the Operational brief: Indicators of money laundering in financial transactions related to real estate.²

Large cash transactions

When a licensee receives $10,000 CAD or more in cash, either in a single transaction or in multiple transactions, within a 24-hour period, he must submit a report within 15 calendar days.

FINTRAC has developed Large Cash Transaction Reports guidelines (LCTRs) that licensees should refer to for more information.³

Large virtual currency transactions

When an amount of $10,000 or more is received in virtual currency, either in a single transaction or in multiple transactions, within a 24-hour period, a report must be submitted by the licensee within five working days after the day you receive the amount.

FINTRAC has developed Large Virtual Currency Transaction Reports (LVCTRs) that licensees should refer to for more information.⁴

Terrorist property

Where property in the possession or control of a licensee is owned or controlled by or on behalf of a terrorist or a terrorist group, a report must be submitted immediately to FINTRAC by the licensee.    

FINTRAC has developed Terrorist Property Reports that licensees should refer to for more information.⁵