Real Estate Agents to Collect and Verify ID
New Law Requires Real Estate Agents to Collect and Verify ID of Buyers and Sellers
New
federal laws and regulations designed to prevent money laundering and
anti-terrorist financing went into effect June 23, 2008. Realtors must
obtain proof of identity from all parties in any real estate
transaction, even if one of the parties is not represented by a real
estate agent. Realtors must also track the source of funds received
during the course of a real estate transaction, such as the deposit. If
the client is a corporation, corporate documentation and the names of
the corporation directors must be provided and the corporation must
disclose if a third party is involved in the transaction.
"Real estate agents have had legal obligations under the federal
government's push to prevent criminal activity and terrorism since
2001, when Canada's first comprehensive laws to combat money laundering
and terrorist financing were introduced," says RAHB President, Ann
Cosens. “Real estate agents were required to report only suspicious
transactions or transactions involving more than $10,000 in cash.”
These new regulations are part of federal legislation (Bill C-25)
passed in 2007 that requires a number of industries, including real
estate, to do more to help stop money laundering and terrorist
financing. The regulations are enforced by the federal agency known as
the Financial Transactions and Reports Analysis Centre of Canada, or
FINTRAC.
As part of the new rules, Realtors are required to keep all
identification and the receipt of funds report on file for at least
five years and provide it to FINTRAC. Realtors are also required to
complete a report on the receipt of all funds received during a real
estate transaction.
To comply with the new regulation, real estate agents will need to get more acquainted with their clients.
Also, under the new FINTRAC regulations,
real estate agents dealing with clients they never meet must also
verify identification. The broker office involved can do this with a
service agreement with an agent or mandatary in the area where the
client is located. The agent or mandatary must then meet the client,
verify the identification of the client, and provide the information to
the broker office handling the real estate transaction.
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