Presentations to Reporting Entities

Slide 1: Requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Real Estate Developers

2008

Slide 2: Presentation Overview

• Introduction
• About the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
• Overview of money laundering and terrorist financing
• Real estate developers and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
• FINTRAC's compliance approach
• Timeline

Slide 3: Introduction

• New requirements under the PCMLTFA for real estate developers are effective on February 20, 2009.
• FINTRAC will be responsible for ensuring compliance with all requirements.

Slide 4: Who Is a Real Estate Developer?

• Any individual or entity that has sold to the public, in a given year (after 2007), any of the following:
  • Five or more new dwelling units
  • One or more new commercial or industrial buildings
  • One or more new multi-unit residential buildings (that total five dwelling units or more)
• Land development and the sale of land without homes or other buildings is not covered.
• Excludes sales by real estate brokers and licensed real estate sales representatives as they have their own obligations.

Slide 5: FINTRAC

• FINTRAC is Canada's financial intelligence unit. The Centre produces financial intelligence for law enforcement and national security agencies. FINTRAC is uniquely positioned to analyze millions of financial reports to produce this intelligence.
• Created in 2000 under the PCMLTFA.
• Plays an integral role in Canada's effort to combat organized crime and terrorism.
• Independent agency reporting to the Minister of Finance and Parliament.
• Operates at arm's length from law enforcement and other bodies.
• Works in partnership with individuals and entities subject to the PCMLTFA.

Slide 6: FINTRAC's Role

• Collect, analyze, assess and disclose information related to money laundering, terrorist activity financing and threats to the security of Canada.
• Ensure compliance with obligations under Part 1 of the PCMLTFA and related regulations.
• Ensure protection of personal information under its control.
• Enhance public awareness of money laundering and terrorist financing.

Slide 7: What Is Money Laundering?

• The United Nations defines money laundering as “any act or attempted act to disguise the source of money or assets derived from criminal activity”.
• Essentially it is the process where “dirty money” is transformed into “clean money”.
• More than just cash, it also includes valuable items (for example real estate, diamonds) and other kinds of funds (for example electronic funds).

Slide 8: Stages of Money Laundering

• Placement – initial stage of putting the cash into the financial system
• Layering – creating layers of financial transactions to disguise the audit trail and sources of funds
• Integration – returning the laundered funds back into the economy to create a perception of legitimacy

For more information, please consult Guideline 1: Backgrounder.

Slide 9: What Is Terrorist Financing?

• Terrorist financing is the process by which money is provided to an individual or group to fund terrorist activities
• Different from money laundering - funds may be either from legitimate or illegitimate sources, but used to help facilitate a terrorist act
• Often deal in smaller amounts than money laundering

For more information, please consult Guideline 1: Backgrounder.

Slide 10: Why Are Real Estate Developers Covered?

• Real estate is one of several business sectors that is at risk for money laundering.
• According to an independent study, real estate transactions are frequently cited in RCMP money laundering cases.
• Real estate is a means used by criminals to obscure source of funds and hide ownership of assets (Financial Action Task Force).
• Real estate brokers and sales representatives have been covered since 2002.