As a real estate lawyer and speaker, I have found that having a proper FINTRAC compliance program in place at a real estate brokerage not only keeps them in good standing with FINTRAC auditors, but also helps them close more deals successfully.
Conversely, without a proper program, the likelihood of deals not closing increases as lenders and title insurers conduct thorough due diligence on potential buyers and sellers.
Furthermore, the penalties imposed by FINTRAC can be detrimental to a brokerage, with increasing penalties that can damage the brokerage’s brand image and reputation when publicly named online.
Administrative penalties are on the rise
Over the past three years, several brokerages across Canada have faced administrative penalties ranging from $50,000 to over $250,000.
For example, in March 2024, a prominent Toronto brokerage was fined $107,827.50 for various violations uncovered by FINTRAC auditors, emphasizing the importance of vigilance.
To view the full list of penalties, search for “public notice of FINTRAC monetary penalties” online to understand the consequences of non-compliance.
Essential questions for every brokerage to ask clients
Here are key questions to ask clients to ensure compliance and avoid trouble:
“How did you find me?”
Understanding how a client found you helps establish their legitimacy and community connections.
“Where do you work?”
Knowing a client’s occupation demonstrates community ties and aids in compliance.
Utilize online tools to verify clients
Use apps to identify clients, prevent fraud, and monitor transactions post-closure.
Consider client evaluation like a landlord
Anticipate consequences of dealing with suspicious clients to protect your brand image and reputation.
Observe client behavior during FINTRAC inquiries for red flags.
Be prepared to provide client information
Have a clear story for each client to address any potential issues that may arise.
Compliance safeguards your business, reputation, and allows you to focus on closing deals confidently.
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