ExamPassFINTRAC rules for a real estate salesperson in Ontario
When a brokerage acts for a buyer or seller in a purchase or sale, it falls under the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which FINTRAC administers. In practice the salesperson does most of the work: verifying the identity of each party, recording every amount received, asking about third parties, checking for politically exposed persons, flagging suspicious transactions and keeping the records for at least five years. The brokerage runs the compliance program.
FINTRAC questions appear in Course 1, Course 2 and the simulations, and they reward precise thresholds and triggers. FINTRAC is federal and separate from RECO, and meeting one regime never excuses the other. Below: what each obligation requires, and where the course and current regulations differ.
When do FINTRAC obligations apply to real estate?
A real estate broker or sales representative is covered when acting for a purchaser or vendor in the purchase or sale of real property (Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2002-184, s. 53; PCMLTFA, s. 5(j)). Leasing and property management are not purchases or sales, which is why the course treats them as outside the identification duties.
The Act requires covered persons to keep records (s. 6), verify identity (s. 6.1), report suspicious transactions (s. 7) and run a compliance program (s. 9.6). Where the salesperson is an employee of the brokerage, the regulations put responsibility for compliance on the employer (SOR/2002-184, s. 133(1)). In practice, though, you are the one holding the ID, the deposit and the red flags.
How do you verify a buyer's or seller's identity?
The regulations allow these methods for an individual (SOR/2002-184, s. 105(1)):
| Method | What it involves |
|---|---|
| Government photo ID | An authentic, valid and current photo ID issued by the federal, a provincial or a foreign government, not a municipal one. You confirm the name and photo match the person |
| Credit file | A Canadian credit file in existence for at least three years, drawing on more than one source. Name, address and date of birth must match |
| Dual process | Two of: name and address, name and date of birth, name and a financial account, each from a different reliable source |
| Government verification service | Information received on request from a federal or provincial body authorized to verify identity |
The course teaches the first three; answer exam questions with those. In the dual process neither the client nor you can be a source (s. 105(4)). An emailed passport scan is not verification. If you cannot meet the person, someone else may verify for you, but only under a written agreement entered into for that purpose (s. 106(3)(a)).
Who verifies whom. If every party is represented, each brokerage verifies only its own client (s. 101(2)). If one or more parties are unrepresented, each brokerage verifies the unrepresented party (s. 101(3)) and keeps an information record on them (s. 58(1)(b)). The course teaches "reasonable measures, recorded" for a self-represented party (who also gets the RECO Information Guide first). Answer that way on the exam; current law says "verify".
What about corporate clients and beneficial ownership?
For a corporation, confirm its existence from its certificate of incorporation, an annual securities filing, or the most recent record that shows its name, address and directors (s. 109(1)). For a partnership, trust or other entity, use its partnership agreement, articles of association or a similar record (s. 112(1)). Keep a copy of the part of the corporate records that shows who can bind the corporation (s. 58(1)(c)).
Then find out who really owns or controls it (s. 138(1)):
| Entity | Who you name |
|---|---|
| Corporation | All directors, and everyone who owns or controls, directly or indirectly, 25% or more of the shares |
| Widely held or publicly traded trust | All trustees, and everyone with 25% or more of the units |
| Other trust | All trustees and all known beneficiaries and settlors |
| Other entity | Everyone who owns or controls 25% or more |
| Every case | Information on ownership, control and structure |
Take reasonable measures to confirm it is accurate (s. 138(2)). A holder at exactly 25% counts.
What goes into a receipt of funds record?
Every amount received gets a receipt of funds record, unless it comes from a financial entity or public body (s. 58(1)(a)). Cheques, drafts and wires count, not only cash.
Where both sides are represented and the listing brokerage receives the buyer's deposit, the buyer's brokerage keeps the receipt of funds record (s. 58(2)). If only one brokerage is involved, because of multiple representation or a self-represented buyer, that brokerage keeps it.
Two large-amount reports sit on top of the record:
- Large cash: $10,000 or more in cash in a single transaction (s. 54), reported within 15 days (s. 132(3)). Cash amounts totalling $10,000 or more within 24 consecutive hours count as one transaction when you know they come from, or are made for, the same person or beneficiary (s. 126).
- Large virtual currency: $10,000 or more in virtual currency (s. 55), reported within five working days (s. 132(2)).
A certified cheque or bank draft is not cash.
When must you ask about a third party?
A third party is someone not in front of you who gives the instructions or supplies the money. When you receive $10,000 or more in cash or virtual currency, you must take reasonable measures to find out whether the person paying is acting for a third party (s. 134(1)). If so, record the third party's name, address, date of birth and occupation (or an entity's business and registration details) and their relationship to the payer (s. 134(2)). If you cannot tell but suspect there is one, record that too (s. 134(3)).
The course teaches asking on every file: sound practice, and the exam answer.
What are the rules for politically exposed persons?
A real estate brokerage must take reasonable measures to determine whether a person is a politically exposed foreign or domestic person, the head of an international organization, or a family member or close associate of one:
- when it enters into a business relationship with them, and periodically after (s. 120.1(1) and (2));
- when it receives $100,000 or more in cash or virtual currency from them (s. 120.1(3));
- when it detects a fact that gives reasonable grounds to suspect it (s. 120.1(4)).
In real estate, a business relationship begins the first time you are required to verify the client's identity (s. 4.1(c)). A foreign politically exposed person triggers reasonable measures to establish the source of their wealth, plus enhanced measures (s. 122.1(1)). For a domestic one or a head of an international organization, the same steps apply where the brokerage's risk assessment rates the risk high (s. 122.1(3)). The determination is due within 30 days (s. 122.1(5)).
When do you file a suspicious transaction report?
When there are reasonable grounds to suspect that a transaction, completed or only attempted, is related to money laundering, terrorist financing or sanctions evasion (PCMLTFA, s. 7). There is no dollar threshold, and you do not need proof. The report goes to FINTRAC as soon as practicable after you have taken the measures that establish reasonable grounds (Suspicious Transaction Reporting Regulations, SOR/2001-317, s. 9(2)).
You must not disclose that a report has been or will be made, or its contents, with intent to prejudice a criminal investigation (PCMLTFA, s. 8). A copy is kept for at least five years after it is sent (SOR/2001-317, s. 12.1(1)).
Suspicion attaches to behaviour, not people: shifting stories about funds, deposits split to stay under $10,000, or a buyer directed by someone on the phone.
How long are FINTRAC records kept?
At least five years (SOR/2002-184, s. 148(1)). Information records run from the last business transaction; most others from creation. Records must be producible within 30 days of a request (s. 149). Shredding the file at closing is a breach.
A worked example: a numbered company in Barrie
Jasper Kowalczyk, a salesperson in Barrie, represents 2915566 Ontario Inc. buying a $1,240,000 fourplex. The director, Nadia Ferreira-Lam, signs the offer. Jasper verifies Nadia's photo ID in person, confirms the corporation exists from a current corporate profile, and copies the by-law showing she can bind it. Shares are held 60% by Nadia, 25% by her brother Tomas and 15% by a cousin, so Nadia and Tomas are recorded as beneficial owners, with all directors. The $60,000 deposit arrives by bank draft from the corporation's account: a receipt of funds record, no large cash report. When Nadia mentions an overseas "partner" who is "really funding this", Jasper asks the third-party question, records the answer, and brings the file to the compliance officer.
Frequently asked questions
Is a $50,000 certified cheque a large cash transaction? No. It is not cash. It still needs a receipt of funds record.
Do I verify a self-represented buyer's identity? Yes. Under current law each brokerage that represents a party verifies the unrepresented party. The course describes this as reasonable measures, recorded.
Can I tell a client I have filed a suspicious transaction report? Do not. The Act prohibits disclosing a report with intent to prejudice a criminal investigation. Say nothing and refer questions to your compliance officer.
How does ExamPass help you practise this?
ExamPass gives you hundreds of original scenario questions on FINTRAC, with every option explained, including the threshold traps. The Study notes set out what the course teaches beside current law, and the Mock Exam, Drill Wrong Answers and AI Tutor help you lock in the numbers. Pair this with how to study Course 1. See courses and pricing