FINTRAC Compliance or Where is the money coming from

FINTRAC Compliance or Where is the money coming from
By Mark Weisleder

A recent study is focusing on how real estate buyers are using nameless corporations to
attempt to launder money when purchasing real estate. Real Estate agents, brokerages,
lawyers and lenders all have a role to play in making sure you are not caught up in this.
While giving FINTRAC seminars to brokerages, or conducting FINTRAC audits on a
brokerage FINTRAC policies, I have been able to identify 5 areas where brokerages can
improve to make sure they are not part of the problem

1. Verify the corporation and the person signing
The main issue identified in the study is real estate purchased by numbered companies who
may not have any real connection to Canada and are used as a vehicle to launder money.
Make sure you ask for the articles of incorporation or a recent tax assessment to make sure
the person signing for the company has authority and then personally identify the person
signing.

2. Are there other Directors, shareholders and address for the corporation
It is also important to ask if there are any other Directors in the corporation and if so, their
names and addresses must be listed. If anyone else owns 25% or more of the shares of the
corporation, these shareholders and their addresses must also be listed. Also look for the
registered office of the corporation as well, which should be on the articles of incorporation
or the tax assessment.

3. Ask the lawyer if you cannot verify the information yourself
The buyer lawyer will also have to verify that the person signing for the company has
authority. If you are not sure how to read the documents, consult with the buyer lawyer who
can review all the company documents contained in the minute book, to make sure you have
all the proper information

4. Where is the money coming from?
No one expects you to be a detective. Yet under the FINTRAC guidelines for completing the
receipt of funds form, it is requested that you obtain verification of the account number
where the deposit money is coming from. If you have a certified cheque it will identify the
account but it is more challenging if a bank draft is used, as the account information is not on
it. While FINTRAC asks that you obtain either a void or cancelled cheque from the account
that was used or a bank form showing the account information, the fact is that many clients
will refuse to give this to you due to fears about identity theft. In that case, ask the client

directly if the deposit came from their account and then write on the form something to the
effect of “Buyer confirms deposit came from their bank account.”

5. Is company officer connected to your community?
When the person signing for the company is connected to your community, there is less
likelihood for fraudulent activity. This is why it is so important to clearly complete the
occupation of the buyer on the FINTRAC forms as it shows how the buyer is connected to
your community. Different precautions will have to be used when you are dealing with
overseas buyers.

If you have any questions related to any of the issues raised in this newsletter, or you wish to
schedule FINTRAC training or an audit of your own FINTRAC policies, or you wish to
make use of our mobile closing services this year, please contact me toll free at 1-888-876-
5529 or at mark@realestatelawyers.ca
Mark Weisleder is a Partner, author and speaker at the law firm Real Estate Lawyers.ca LLP.
Contact him at mark@realestatelawyers.ca or toll free at 1-888-876-5529

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