Beginning October 11, 2024 Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financial Act will apply to mortgage brokers, administrators, and lenders (together referred to here as brokers). The requirements set out in the Act and related regulations and policies are commonly referred to as FINTRAC requirements.
Further information as to compliance requirements can be found in our Member Resources Area – click here to gain access to these (please note you will need to be signed in).
Key requirements of the FINTRAC requirements include the following:
Compliance Program:
Brokers must establish and maintain a compliance program that meets the FINTRAC requirements.
Know Your Client (“KYC”):
- Brokers must verify the identity of a client when they initially establish their business relationship.
- Brokers, in specified circumstances, must verify their clients’ identity.
- Brokers must identify others who are not represented in the transaction.
CMBA-BC has partnered with Treefort to bring you the most robust Know Your Client (KYC) identity verification solution in Canada. This will help you prepare for your new FINTRAC reporting requirements, effective October 11. Learn More Here
Politically Exposed Persons (“PEPs”) and Heads of International Organizations (“HIOs”):
- Brokers must take reasonable measures to determine whether a client is a domestic or foreign politically exposed person (PEP) or head of an international organization (HIO) if they receive from them $100,000 or more in cash or virtual currency.
- Brokers must take reasonable measures to determine whether a client is a family member or close association of such an individual or head.
Reporting Requirements:
- Brokers must file a suspicious transaction, terrorist property, large cash transaction, or large virtual currency transaction report if the subject transaction meets criteria specified in the FINTRAC requirements.
Record-Keeping Requirements:
- Brokers must keep records in accordance with criteria specified in the FINTRAC requirements.
Administrative Penalties:
- FINTRAC is authorized to conduct compliance examinations.
- FINTRAC is authorized to levy administrative penalties in the following amounts:
- $1 to $1000 per violation for a minor violation
- $1 to $100,000 for a serious violation
- $1 to $100,000 for a very serious violation, in the case of an individual
- $1 to $500,000 for a very serious violation, in the case of an entity
Because FINTRAC’s requirements are worded in terms of achieving specified outcomes rather than being prescriptive, it is not possible to provide a detailed, generic compliance checklist.
The results-oriented approach allows flexibility for brokerages to innovate and tailor their compliance strategies according to their operational realities. For example, small, medium, and large brokerages would apply the compliance requirements differently. With that in mind, we are working on providing a course with a ‘checklist’ that will provide guidance in applying the requirement to your specific circumstances. However, for reasons stated, the checklist will be in less detail than a broker would hope for in an ideal world.
Further information as to compliance requirements can be found in our Member Resources Area – click here to gain access to these (please note you will need to be signed in).