Language selection

Search

When to verify the identity of persons and entities — Real estate brokers or sales representatives, and real estate developers

From: Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

Overview

This guidance came into effect on June 1, 2021.

This guidance on client identification describes when real estate brokers or sales representatives, and real estate developers must verify the identity of persons and entities as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations. Details on how to verify the identity of persons and entities are available in FINTRAC's Methods to verify the identity of persons and entities.

If you are a real estate broker or sales representative, you must verify client identity when you act as an agent or mandatary in the purchase or sale of real estate.Footnote 1

If you are a real estate developer, you must verify client identity when you sell to the public a new house, new condominium unit, new commercial or industrial building, or new multi-unit residential building. In addition, if you are a real estate developer that is incorporated, you must verify the identity of clients when you are acting on your own behalf, or on behalf of a subsidiary or affiliate.Footnote 2

In some situations, a real estate developer may be the client of a real estate broker or sales representative if they use the broker or sales representative as their agent for the purchase or sale of real estate. In these instances, the broker or sales representative must meet all the associated requirements, including the requirement to verify identity.

A real estate developer is not considered to be the client of a real estate broker or sales representative when they hire the broker or sales representative as their employee. In this case, the real estate developer, as the employer, has the obligation to identify clients even if the employee performs this on their behalf.Footnote 3

Who is this guidance for

  • Real estate brokers or sales representatives, and real estate developers

In this guidance

  1. When do I have to verify the identity of persons and entities?
  2. What is the difference between verifying identity and keeping client identification information up to date?
  3. What are the exceptions to client identification requirements?

**Note: Throughout this guidance, references to dollar amounts (such as $10,000) are in Canadian dollars.

1. When do I have to verify the identity of persons and entities? 

As a real estate broker or sales representative, or a real estate developer, you must verify the identity of clients for the following:

  1. Large cash transactions
  2. Large virtual currency transactions
  3. Suspicious transactions
  4. Receipt of funds
  5. Information records
  6. Unrepresented parties

a. Large cash transactions

You must verify the identity of every person or entity from which you receive $10,000 or more in cash when the transaction takes place.Footnote 4 This includes a situation where you are deemed to have received cash because you have authorized another person or entity to receive it on your behalf.Footnote 5

**Note: This obligation is subject to the 24-hour rule.Footnote 6

b. Large virtual currency transactions

You must verify the identity of every person or entity from which you receive virtual currency (VC) in an amount equivalent to $10,000 or more when the transaction takes place.Footnote 7 This includes a situation where you are deemed to have received virtual currency because you have authorized another person or entity to receive it on your behalf.Footnote 8

**Note: This obligation is subject to the 24-hour rule.Footnote 9

c. Suspicious transactions

You must take reasonable measures to verify the identity of every person or entity that conducts or attempts to conduct a suspicious transaction, regardless of the transaction amount, and including transactions that would normally be exempt from client identification requirements, before sending a Suspicious Transaction Report (STR).Footnote 10

d. Receipt of funds

You must verify the identity of a person from whom you receive funds in any amount at the time the transaction takes place.Footnote 11 You must also verify the identity of a corporation or other entity from which you receive funds in any amount, or on whose behalf the transaction is conducted, within 30 days after the day on which the transaction is conducted.Footnote 12

If a real estate broker or sales representative receives funds from a client represented by another real estate broker or sales representative, then it is the broker or sales representative that holds the relationship with the client providing the funds that has to identify the client.Footnote 13

e. Information records

You must verify the identity of every person or entity for which an information record is kept.Footnote 14

f. Unrepresented parties

When there are unrepresented parties in a transaction, all real estate brokers or sales representatives representing a party to the transaction must take reasonable measures to verify the identity of the person or entity that is unrepresented.Footnote 15

2. What is the difference between verifying identity and keeping client identification information up to date?

As part of your ongoing monitoring requirements for business relationships, you must keep client identification information up to date, at a frequency that will vary based on your risk assessment, and as outlined in your policies and procedures.Footnote 16 This does not require you to re-identify clients in accordance with the methods to verify identity. As explained in the ongoing monitoring guidance, the requirement is only for you to keep client identification information up to date. This is understood to be information that you have about your client such as their name and address. In the case of a person, this would also include, but is not limited to, the nature of their principal business or their occupation; and in the case of an entity, the nature of its principal business.

3. What are the exceptions to client identification requirements?

You do not have to re-identify a person or an entity if you previously did so using the methods specified in the Regulations in place at the time, and kept the associated records, so long as you have no doubts about the information used.Footnote 17

Large cash transactions

You do not have to verify the identity of a person or entity that conducts a large cash transaction if you receive the cash from a client that is a financial entity (FE) or a public body, or from a person who is acting on behalf of a client that is an FE or a public body.Footnote 18

Large VC transactions

You do not have to verify the identity of a person or entity that conducts a large VC transaction if you receive the VC from a client that is an FE or a public body or from a person acting on behalf of a client that is an FE or public body.Footnote 19

When you receive VC as compensation for the validation of a transaction that is recorded in a distributed ledger or you receive a nominal amount of VC for the sole purpose of validating another transaction or a transfer of information — you do not need to keep a large VC transaction record and do not need to verify identity.Footnote 20

Suspicious transactions

You do not have to take reasonable measures to verify the identity of the person or entity that conducts or attempts to conduct a suspicious transaction if:

Receipt of funds

You do not have to verify the identity of a client in connection with the receipt of funds if you received the funds from a client that is an FE or a public body, or from a person acting on behalf of a client that is an FE or public body.Footnote 23

Public bodies, very large corporations and trusts

You do not have to verify the identity of a person or entity in connection with the receipt of funds or an information record if the client is:Footnote 24

Details and history

Published: March 2021

For assistance

If you have questions about the Know your client requirements, please contact FINTRAC by email at guidelines-lignesdirectrices@fintrac-canafe.gc.ca.

Date Modified: