FINTRAC (Real Estate)

What is FINTRAC in real estate?

FINTRAC is Canada's Financial Transactions and Reports Analysis Centre, the federal financial intelligence unit responsible for detecting, preventing, and deterring money laundering and terrorist financing. Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, every Ontario real estate brokerage and individual registrant must verify client identity, keep prescribed records, and submit reports to FINTRAC for large cash transactions, suspicious transactions, and certain other activities. Compliance is mandatory and audited.

What registrants must do for FINTRAC compliance

Every Ontario brokerage must implement a documented compliance program with five mandatory elements:

1. A compliance officer appointed at the brokerage level
2. Written policies and procedures covering identification, record-keeping, and reporting
3. Risk assessment and mitigation for the brokerage's clients and transactions
4. Ongoing training for every registrant and staff member
5. A biennial review of the compliance program by an independent or internal reviewer

Individual registrants are responsible for executing client identification, completing the OREA Form 630 (Individual Identification Information Record) for every client, and flagging suspicious activity to the brokerage's compliance officer.

The reports registrants must file

Three FINTRAC reports come up most often in real estate:

The $10,000 cash threshold is exam-tested. Cash means physical currency or coin. Bank drafts, certified cheques, and electronic transfers do not trigger LCTRs even at high amounts.

Where this appears in your Humber program

FINTRAC compliance is core content in Course 1: Real Estate Essentials under regulatory framework and reappears in Course 5: Getting Started for new-registrant business setup. Continuing-education advertising-compliance and AML modules revisit FINTRAC obligations annually.

Identity verification methods

Registrants verify identity by one of three methods set out in the regulations:

• Government-issued photo ID method: the registrant inspects an original valid government-issued photo ID (driver's licence, passport, provincial ID card) in person and records the document type, number, jurisdiction, and expiry date. This is the default and most-used method.
• Credit file method: the registrant pulls a Canadian credit file at least three years old that contains at least two trade lines and uses it to confirm name, address, and date of birth. The check must be on a real-time live credit file, not an archived report.
• Dual-process method: two reliable independent sources are used to verify identity, with at least one source confirming each of name + address, name + date of birth, and name + financial account. Common combinations include a CRA tax document plus a utility bill plus a bank statement.

For non-individual clients (corporations, trusts, partnerships), additional beneficial ownership verification applies — the registrant must identify any individual who owns or controls 25% or more of the entity. Course 1 questions frequently test which verification method applies to a given client scenario and which records must be retained.

Politically Exposed Persons (PEPs) and high-risk clients

Registrants must determine whether a client is a Politically Exposed Person (PEP), the head of an international organization (HIO), or a family member or close associate of either. PEPs include current and former senior elected officials, judges, military officers, ambassadors, and senior executives of state-owned enterprises in Canada and abroad. When a PEP relationship is identified:

• Senior management approval is required to proceed with the transaction
• The source of funds must be established with reasonable measures
• Ongoing enhanced monitoring applies for the duration of the relationship

PEP determination is one of the most-tested compliance topics across the salesperson and broker exams. The misconception that PEP status only applies to foreign officials is a common wrong-answer trap; the rules apply to domestic Canadian PEPs as well, with slightly less stringent monitoring requirements.

Record retention timelines

FINTRAC records must be kept for the following minimums:

• Identification records: 5 years from the last transaction with the client
• Receipt of funds records: 5 years from creation
• Large Cash Transaction Reports: 5 years
• Suspicious Transaction Reports: 5 years
• Risk assessment documents: 5 years from the last update

Records can be kept on paper or electronically. The brokerage's compliance officer is responsible for retention; individual registrants must hand records over to the brokerage at the close of every transaction. Failing to maintain records is a separate violation from failing to file reports — both penalties can be levied for the same incident.

Frequently asked questions

Why is my realtor asking for FINTRAC identification?

Your realtor is required by federal law to verify the identity of every client and keep prescribed records. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires registrants to obtain government-issued ID, complete an Individual Identification Information Record, and retain it for at least five years. Refusing to provide ID prevents the brokerage from acting on your behalf. It is not optional.

What is the $10,000 rule for FINTRAC?

The $10,000 rule requires real estate brokerages to file a Large Cash Transaction Report (LCTR) with FINTRAC within 15 days when they receive $10,000 or more in cash in a single transaction or in two or more cash amounts aggregating to $10,000+ within 24 hours. Cash means physical currency only. Certified cheques, bank drafts, and wire transfers do not trigger an LCTR regardless of amount.

What three reports must be submitted to FINTRAC?

The three core FINTRAC reports for real estate are: (1) Suspicious Transaction Reports (STRs) filed within 30 days when there are reasonable grounds to suspect money laundering or terrorist financing, (2) Large Cash Transaction Reports (LCTRs) filed within 15 days for $10,000+ cash receipts, and (3) Terrorist Property Reports filed without delay when a registrant has property they know or suspect is owned by a designated terrorist entity.

What happens if a brokerage fails to comply with FINTRAC?

FINTRAC can impose administrative monetary penalties ranging from $1 to $500,000 per violation, depending on severity and the size of the brokerage. Repeat or wilful non-compliance can lead to criminal charges. RECO can also discipline registrants for FINTRAC failures because compliance is an obligation under TRESA's Code of Ethics. Penalties from FINTRAC and RECO can be imposed in parallel.

Practice this topic

ExamAce covers FINTRAC obligations, the five-element compliance program, and report-trigger thresholds in the Course 1 question bank.