Real estate brokers or sales representatives, and real estate developers

Real estate brokers or sales representatives, and real estate developers must fulfill specific obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations, to help combat money laundering and terrorist activity financing in Canada.

Real estate brokers or sales representatives

For the purpose of the PCMLTFA and associated Regulations, a real estate broker or sales representative is a person or entity that is authorized under provincial legislation to act as an agent for purchasers or vendors in respect of a purchase or sale of real property or immovables. This includes the buying or selling of land, houses, commercial buildings, etc.

As a real estate broker or sales representative, you must meet your PCMLTFA obligations when you act as an agent or mandatary for a purchaser or vendor in respect of the purchase or sale of real property or immovables. This applies even if you do not receive commission for the real estate transaction and regardless of whether you have related fiduciary duties with respect to the transaction.

As a real estate broker or sales representative, you do not have obligations for activities that relate to property management. This means that if you only deal in property management transactions, such as leases or rental management (not purchases or sales), the obligations explained further below do not apply to you.

If you are a real estate sales representative acting on behalf of a real estate broker, the requirements explained further below are the responsibility of the broker, except with respect to reporting suspicious transactions, which is applicable to both you and the broker.

Real estate developers

For the purpose of the PCMLTFA, a real estate developer is a person or entity (other than a real estate broker or sales representative) that, in any calendar year after 2007, has sold the following to the public:

As a real estate developer, you must meet your PCMLTFA obligations when you sell any of the property listed above, including, if you are a corporation, when you do so on behalf of a subsidiary or affiliate.

Sales to the public include those to a person, a corporation or any other type of entity.

A new house or other building is one that was constructed within the past two years and was not occupied for its intended purpose before being sold. For example, a home occupied by a developer as a sales office would still qualify as a new home, as long as it is sold within two years of being built.

A new house, condominium unit, commercial or industrial building, or multi-unit residential building includes:

From the day you first meet any of these conditions regarding your sales, you will be considered a real estate developer for the rest of that year. You will also be considered a real estate developer in following years, regardless of whether you meet any of the conditions in those following years. In other words, once you are considered a real estate developer, you will remain as such from that day forward, until there is a substantial and permanent change to your operations.

If you are a real estate developer that is a corporation, you are subject to these obligations whether you sell buildings on your own behalf or on behalf of a subsidiary or affiliate. An entity is affiliated with another entity if one of them is wholly-owned by the other, both are wholly-owned by the same entity or their financial statements are consolidated.

If, as a real estate developer, you engage a real estate broker or sales representative to act as your agent for sales to the public (i.e. you are their client), the broker or sales representative will be responsible for the legislative obligations.

However, if you, as the real estate developer, hire a real estate broker or sales representative as your employee, then you are responsible for meeting all of the obligations under the PCMLTFA and associated Regulations.

If you are an employee of a reporting entity, these requirements are the responsibility of your employer, except with respect to reporting suspicious transactions, which is applicable to both you and your employer.

Real estate brokers, sales representatives, and real estate developers are responsible for the following requirements under the PCMLTFA and associated Regulations.

*Note: On June 1, 2021, regulatory amendments, which will create or change obligations for all reporting entities (REs) subject to the PCMLTFA and associated Regulations, will come into force. FINTRAC expects that REs will comply with the amended Regulations, but will exercise flexibility in assessing and enforcing compliance with certain record keeping and reporting requirements. See the Notice on forthcoming regulatory amendments and flexibility for more information.

Table 1—Summary of requirements for real estate brokers or sales representatives, and real estate developers
Category of requirement under the PCMLTFA and associated Regulations Requirements
Compliance program

Real estate brokers and sales representatives, and real estate developers must implement a compliance program. A strong compliance program will form the basis of meeting all your regulatory requirements. For more information, see Compliance program requirements and the Risk assessment guidance.

Know your client

Real estate brokers and sales representatives, and real estate developers must verify the identity of persons and entities for certain activities and transactions, and carry out other customer due diligence activities, as described below:

When to verify the identity of persons and entities
Real estate brokers and sales representatives, and real estate developers must verify the identity of persons and entities when conducting certain transactions and activities. For more information, see When to verify the identity of persons and entities – Real estate brokers or sales representatives, and real estate developers..

Methods to verify the identity of persons and entities
Real estate brokers and sales representatives, and real estate developers must verify the identity of persons and entities using the methods prescribed by the PCMLTFA and associated Regulations. For more information, see Methods to verify the identity of persons and entities.

Business relationship requirements
Real estate brokers and sales representatives, and real estate developers enter into a business relationship with a client the first time they are required to verify the identity of that client. For more information, see Business relationship requirements.

Ongoing monitoring requirements
Real estate brokers and sales representatives, and real estate developers have ongoing monitoring requirements when they enter into a business relationship with a client. For more information, see Ongoing monitoring requirements.

Beneficial ownership requirements
Real estate brokers and sales representatives, and real estate developers must obtain and take reasonable measures to confirm the accuracy of beneficial ownership information for entities. For more information, see Beneficial ownership requirements.

Third party determination requirements
Real estate brokers and sales representatives, and real estate developers have third party determination requirements when they are required to submit certain reports and keep certain records. For more information, see Third party determination requirements.

Politically exposed persons (PEP) and heads of international organizations(HIO) requirements
Real estate brokers and sales representatives, and real estate developers are required to take reasonable measures to make PEP and HIO determinations for certain activities or transactions. If a real estate broker or sales representative or real estate developer determines that a person is a PEP or a HIO then they have additional related requirements. For more information, see Politically exposed persons and heads of international organizations guidance and Politically exposed persons and heads of international organizations guidance for non-account-based reporting entity sectors.

Reporting

Real estate brokers and sales representatives, and real estate developers must submit the following reports to FINTRAC:

Suspicious transaction reports
For more information, see:

Terrorist property reports
For more information, see:

Large cash transaction reports 
For more information, see:

Large virtual currency transaction reports
For more information, see:

24-hour rule

Real estate brokers and sales representatives, and real estate developers have 24-hour rule requirements for large cash transaction reports and large virtual currency transaction reports. For more information, see Transaction reporting guidance: the 24-hour rule.

Record Keeping

Real estate brokers and sales representatives, and real estate developers must keep certain records, including records related to transactions and client identification. For more information, see Record keeping requirements for real estate brokers or sales representatives, and real estate developers.

Ministerial directives

Ministerial directive requirements apply to all reporting entity sectors. For more information, see Ministerial directives and transaction restrictions.

Penalties for non-compliance

FINTRAC has the legislative authority to issue administrative monetary penalties (AMPs) to reporting entities that are found to be non-compliant with the PCMLTFA and associated Regulations. For more information, see Penalties for non-compliance.

Glossary

The FINTRAC Guidance glossary includes terminology defined in the PCMLTFA and associated Regulations, as well as terms used throughout the guidance. For more information, see FINTRAC's Guidance Glossary.

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