FAQ – “I have a client who is buying an expensive property and they are telling me their occupation is ‘student’. Is this OK for FINTRAC identification?”
In this video Steve Jamieson, Managing Broker of RE/MAX Crest Realty Westside, describes how to properly identify your client under the requirements of Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Here’s a brief summary:
Know your client
It is an expectation of FINTRAC is that you know your client. Okay, so your student client may in fact be independently wealthy in which case you would identify them as per normal procedures on the FINTRAC Individual Identification Information Record. The same goes for somebody who is say, a “housewife”, but make sure you are confident of the individual’s wealth and how it came about.
Source of funds
It is your responsibility to establish whether your client is acting on behalf of a third party i.e. you must know where the money for the transaction is coming from. Perhaps funds are from a parent, sibling, spouse, another family member or acquaintance. In this case, you would fill in “Part B – Verification of Third Parties”. It is not necessary to obtain identification from the third party, but be sure to document their name and address.
If your client starts to dodge questions or avoids giving a straight answer, then you have a suspicious transaction on your hands and you need to speak to you Managing Broker about filing a Suspicious Transaction Report.
Power of Attorney
The person who holds the Power of Attorney is your client, and therefore is the individual who has to be identified. The person who they are representing must be noted in “Part B – Verification of Third Parties”, whether they are the owner of the property that is being sold, or in the case of a purchase, the supplier of the funds.
It is NOT okay to state a client’s occupation as “businessman” or “businesswoman”. FINTRAC requires you to be much more specific in describing what your client actually does for a living. Don’t be vague.
One individual per form
Use a separate form to identify each individual you need to identify. i.e. do not put husband and wife on the same form.
It is essential that the entire FINTRAC document be sent to your brokerage. e.g. in the case of an Individual Identification Information Record, that’s all four pages, not just the pages that have been filled in.
The Corporation/Entity Identification Information Record is used to identify corporations. While this form does not ask for identification details of the individual you are dealing with, it is imperative that you do identify the person and ensure that they have the authority to bind the company.
Verify existence of the corporation
You must confirm existence of the corporation (e.g., certificate of corporate status, published annual report, government notice of assessment). If the record is in paper format, a copy must be kept. If record is an electronic version, a record of the corporation’s registration number and type and source of record (e.g., Corporations Canada website) must be kept.
Your office administrator can assist you with obtaining these documents.
Authority to bind the company
It is imperative that you obtain a copy of the corporate record showing who has authority to bind the corporation regarding the transaction.
You will find this information set out in certificate of corporate status or other record confirming corporation’s existence.(e.g., certificate of incumbency, articles of incorporation, by-laws setting out officers duly authorized to sign on behalf of corporation)
When you identify a client, it is imperative that you meet them in person and physically see their identification. It is not okay to ask for a copy of ID to be faxed or emailed to you.
Should you have done business with the individual in the past and you have already met them in person, then it would be acceptable to ask for a copy of their ID to be sent so that you can document the details on the FINTRAC form. Again, the key is that you know your client.
If it is impossible to physically meet your client in person (say if they are in a different province or overseas), then you need to use an Agent Mandatary Form in agreement with an authorized party who can then perform the identification procedure on your behalf. An authorized party might be a lawyer, a notary, or a RE/MAX agent. Set up the agreement first, before sending your client in to be identified.
FINTRAC identification requirements apply to “No Agency” situations as well. You must identify the party who you are working with, even if you are not in an agency relationship with them.
It is our corporate policy to only accept deposits in the form of a bank draft.
For more information about FINTRAC and how the rules apply to you, check the real estate sector page and associated links on the FINTRAC website.
Please note: The Frequently Asked Question video series is used for training purposes within our group of RE/MAX offices. If you are licensed at a different brokerage, you must refer to your own Managing Broker for advice.