Get Up to Speed: FINTRAC Act Will Soon Apply To Mortgage Sector
| November 30, 2023
by Gary Siegle, RECA Regulatory Compliance Advisor, Mortgage Brokers
To protect consumers and lessen instances of fraud, the mortgage industry is regulated in Canada, with both provincial and federal laws governing industry conduct. RECA licensees are not only required to abide by the Real Estate Act, its Rules, and its Regulations, but must also comply with federal legislation, including those administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and other federal regulators.
FINTRAC currently requires financial institutions and other businesses (including real estate brokers) to report certain financial transactions, such as large cash deposits, international electronic fund transfers, and suspicious activities. This information is used to support law enforcement investigations and to protect the integrity of Canada’s financial system.
In October, FINTRAC announced that the mortgage sector will also now be subject to the same obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act). The Act is designed to combat money laundering and the financing of terrorism in Canada. The following information is a summary of the obligations mortgage brokers and associates will have under the Act. Please read the information that is linked carefully as mortgage licensees have 12 months to become familiar with and implement the new requirements.
As of October, 2024, all mortgage licensees will be responsible for the following:
- establish and implement a compliance program
there are several elements that must be included in your compliance program, including the appointment of a compliance officer, the documentation of a risk assessment of your business and compliance training for employees
- report transactions, including the submission of the following reports to FINTRAC:
Suspicious Transaction Report
Terrorist Property Report
Large Cash Transaction Report
- keep records, including those above, mortgage loan records, information records, receipt of funds record, large virtual currency records and others
- know your client by verifying their identity using the methods listed in the Act
- apply any additional ministerial directives when/if informed by FINTRAC
FINTRAC has stated that they plan to engage with the mortgage sector before and after the new obligations come into force on October 11, 2024, so please watch out for any added information that may circulate in the coming months.
Avoid penalties for non-compliance and ensure you are up to date by learning more here.
If you have any questions on how the obligations under the Act will apply to mortgage licensees, please reach out to email@example.com.