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Sunday, September 14, 2008 - New Law

New law requires real estate agents to verify ID of buyers and
sellers and track deposits

Ottawa –  New federal laws and regulations dealing with money laundering and anti-terrorist financing that went into effect June 23rd 2008, will require real estate agents and brokers to collect and verify more personal information from buyers and sellers. Real estate agents must also now track the source of funds received during the course of a real estate transaction, such as the deposit.

These new regulations are part of federal legislation (Bill C-25) passed in 2007
that requires a number of industries, including real estate, to do more to help stop
money laundering and terrorist financing. The regulations are enforced by the
federal agency known as the Financial Transactions and Reports Analysis
Centre of Canada, or FINTRAC.

Real estate agents have had legal obligations under the federal government’s
push to prevent criminal activity and terrorism since 2001, when Canada’s first
comprehensive laws to combat money laundering and terrorist financing were
introduced.

In the first phase of compliance, real estate agents were required to report only
suspicious transactions, or transactions involving more than $10,000 in cash, Now verified personal information must be kept of the buyer and seller for each and every real estate transaction in Canada. That personal information includes details such as occupation.

Real estate agents are now required to ask for proof of the identity of all buyers
or sellers involved in a Canadian real estate transaction. If the client is a
corporation, that information must include corporate documentation, and the
names of the corporation directors. They must also ascertain if a third party is
involved in the transaction.

This also applies if a buyer or seller involved in a transaction is not represented
by a real estate agent, but the other individual involved is represented. Those
buying or selling privately will be asked by the agent representing the other party
involved in the transaction to provide proof of identity as well, and that record
must be kept by the real estate agent involved in the transaction.

Also under the new FINTRAC regulations, real estate agents dealing with clients
they never meet must also verify personal information. The broker office involved
can do this with a service agreement with an agent or mandatary in the area
where the client is located. That agent or mandatary must then meet the client,
verify the identification of the client, and provide the information to the broker
office actually handling the real estate transaction.

There are buyers, sellers or investors from other countries who rely on expertise
here rather than visiting the property themselves. They must now meet with an official agent of the Canadian broker, and provide proof of identity. This agreement will add to the business costs of the Canadian broker.

In addition to verification of personal information, real estate agents must also
complete a report on the receipt of all funds received during the real estate
transaction, not just those of $10,000 or more.

In order to comply with these new federal regulations, real estate agents are
required to keep this identification and receipt of funds information on file for five
years and provide it to FINTRAC if requested. It is the individual broker office that
will be responsible for the safe keeping of the information, and the brokerage that
will have to respond to any FINTRAC information request.

There were 559,325 transactions reported through the Multiple Listing Service®
operated by local real estate Boards and Associations in 2007.



posted in News at Sun, 14 Sep 2008 14:43:44 -0600

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