Designed for licensees and made available for public information, some of the hyperlinks in this guideline are not publicly available.

2. The legislative and regulatory framework applicable to real estate brokerage in the fight against money laundering and terrorist financing

Two legislative and regulatory sources require the licensee to play a primary watchdog role in the fight against money laundering in the real estate industry: a provincial Act Real Estate Brokerage Act (REBA) and a federal Act Proceeds of Crime (Money Laundering) and Terrorist Financing Act  (PCMLTFA).

One of the purposes of this guideline is to present the key requirements of these two Acts and their regulations.

The Real Estate Brokerage Act

The OACIQ is responsible for enforcing the REBA and the rules of professional conduct applicable to real estate brokers as part of its public protection mission.

In connection with money laundering prevention, the licensee must, among other things, comply with the following requirements of the REBA and its regulations:

  1. Acting with honesty, competence and dignity
  2. Using the trust account properly
  3. Verifying the identity and ascertaining the legal capacity of the represented party or its representative

Each of these ethical obligations will be discussed in the theme menu on the right.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Canada's anti-money laundering and anti-terrorist financing regime consists primarily of two laws: the Criminal Code and the PCMLTFA. The consequences of non-compliance with the Criminal Code and the PCMLTFA are serious, ranging from heavy fines to imprisonment.

The Criminal Code applies to all individuals and businesses. 

Under the Criminal Code, it is an offence to knowingly deal with any property or provide or facilitate any financial or related service for any terrorist activity or any terrorist group or “listed person” (i.e., a person or entity on a government or other agency list). The test for “knowledge” includes wilful blindness.

The PCMLTA applies to “reporting entities.” These entities include financial institutions, credit unions, life insurance companies, loan companies, securities dealers, foreign exchange dealers, money services business, casinos, real estate brokers and developers.

The PCMLTFA has three main goals1:

  • To implement specific measures to detect and deter money laundering and the financing of terrorist activities and to facilitate investigations and prosecution of the related offences
  • To respond to the threat posed by organized crime by providing law enforcement officials with the information they need to deprive criminals of the proceeds of their criminal activities, while protecting individual privacy
  • To help fulfil Canada's international commitments to fight multinational crime
1 Government of Canada, Financial Transactions and Reports Analysis Centre of Canada, https://www.fintrac-canafe.gc.ca/act-loi/1-eng, visited on August 19, 2021.

 

To facilitate the detection and prevention of money laundering, as "reporting entities," licensees must comply with the following key requirements of the PCMLTFA:

  1. Establishing a compliance program
  2. Verifying client identity
  3. Reporting certain specific transactions:
    1. suspicious transactions
    2. large cash transactions
    3. electronic fund transfers of over $10,000
    4. terrorist property
  4. Ensuring proper record keeping

Each of these PCMLTFA requirements will be briefly explained below.

However, it is important to note that the interpretation and application of the PCMLTFA is not the responsibility of the OACIQ. References to PCMLTFA requirements are for information purposes only. Licensees should contact FINTRAC for any additional questions in this regard.

FINTRAC is Canada’s financial intelligence unit.  It is incorporated under the PCMLTFA. Its mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control. FINTRAC is responsible for ensuring compliance with the PCMLTFA and its associated regulations and provides guidance to individuals and entities on how to incorporate these obligations into their activities.

FINTRAC's website provides a variety of information that licensees should read.

Licensees must keep abreast of recent regulatory developments as anti-money laundering laws are constantly changing.

Overlapping of REBA and PCMLTFA requirements

Licensees must comply with the REBA and the PCMLTFA.

The key money laundering and terrorist financing prevention obligations of licensees under the REBA and PCMLTFA are discussed in various sections of this guideline. Some of them overlap and duplicate each other. For example, both the REBA and PCMLTFA have requirements for identity verification and record keeping. That’s why they are brought together and dealt with in the same sections.

Where the two Acts overlap, licensees must always ensure that they comply with the more demanding provision.

Last updated on: December 14, 2021
Numéro d'article: 208773