If there are reasonable grounds  to suspect that a transaction or attempted transaction is related to an actual or attempted money laundering or terrorist financing offence, you must report that to FINTRAC. As a single report is highly unlikely to start an investigation by itself, FINTRAC encourages people to also report suspicious transactions to law enforcement agencies.

Bottom Line Tip:

While FINTRAC asks builders to report suspicious transactions, it does not expect them to be investigators. ‘Reasonable grounds to suspect’ that something is wrong are determined by normal circumstances, business practices and systems within the industry. Most builders already shy away from transactions that don’t pass the ’sniff test’. If it smells rotten, you should probably report it.

What counts as ’suspicious’?

FINTRAC has provided some examples of situations that it believes may be linked to transactions that are being used for money laundering or terrorist financing. If a client does, or attempts to do, any of these things, pay close attention. According to FINTRAC, a sale exhibiting one or more of these indicators may represent a suspicious transaction.

• buyer starts to fill out the Offer to Purchase but stops when asked to provide identification
• buyer purchases property in the name of an associate or relative, other than a spouse
• buyer doesn’t want his or her name on any document that would connect them with the property or uses different names on the Offer to Purchase, deposit receipts and closing documents
• buyer wants the purchase documents to show a lower price than negotiated, paying the difference ‘under the table’
• buyer makes several payments in cash, each of which is less than the ‘$10,000 within 24 hours’ that would trigger a Large Cash Transaction report, but they add up to more than $10,000
• buyer pays in bank notes, bearer cheques or other anonymous instruments
• local news media report that the buyer has been charged with or convicted of criminal or terrorist activity

Click here for more indicators.

NB: There are additional requirements if you are dealing with known terrorists. Click here for more information.

What do you have to do?

• get identification from the buyer (unless you believe asking for the information would let them know you are making a report, or the transaction was only attempted, or you have already done this at the Offer to Purchase stage)
• make a ‘Suspicious Transaction Report’ to FINTRAC. This will include:
  • the number and type of identification document, if available (see previous bullet)
  • date (and time, if available) of the suspicious transactions/events
  • details of suspicious activity
  • details of funds involved: type, amount, currency, etc.
  • account funds were drawn on
  • action you took/will take (if any)
• do not tell the buyers or tip off anyone else that you are making the report, or what it contains
• keep a copy of the report on file for five years

Click here to go to FINTRAC’s web page showing sample suspicious transaction and large cash transaction reports.

When do you have to report?

• within 30 days of when you detect the suspicious activity or combination of activities

How do you file the report?

• electronically if you have a computer with an internet connection
• before you file your first report, you will need to call 1-866-346-8722, get a user ID and password, and then set up a user account online
• go to www.fintrac-canafe.gc.ca, then click on ‘FINTRAC Reporting’
• when filing a report, you have to fill in all the information spaces marked with an asterisk (*) that apply - the rest you only have to fill in if you have the information
• be sure to print or save a copy of your report from the website to keep on file
• click here for more information

Do you have to stop dealing with the buyer?

The legislation doesn’t require you to stop dealing with a buyer when you have reported or are planning to report a suspicious transaction. However, if you do stop before you submit the report, state that in Part H of FINTRAC’s report form.

More Indicators

Here are some more indicators that might trigger a Suspicious Transaction report:

• buyer changes the name of the purchasing party at the last minute
• deposit(s) are paid by a third party, other than the buyer’s spouse or parent
• buyer uses a corporation to buy a house or condo for itself or someone else, when you know the company does not normally deal in real estate
• buyer purchases a property but shows no interest in its features, finishes or the final pre-closing inspection
• buyer purchases a number of properties in a short time period
• buyer will only provide signature on documents by fax (except where they cannot be physically present and you use a mandatory to confirmsee Foreign Buyers)
• buyer does not want correspondence sent to home address
• buyer uses a General Delivery address
• buyer is unusually concerned about your compliance with government reporting requirements and anti-money-laundering policies
• buyer appears extremely nervous or uncomfortable