Federal law requires REALTORS® to verify client identity

REALTORS® across Canada are now required to collect personal identification information from their clients in order to comply with federal legislation.

These new federal laws and regulations took effect June 23, 2008 and are aimed at combating money laundering and terrorist financing activities. As part of the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), financial institutions and REALTORS®, among other professionals, must identify customers who conduct financial transactions.

The regulations are enforced by the federal agency known as the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC.

Under the new rules, REALTORS® must obtain, record, and retain the personal information of their clients, including their full legal name, address, date of birth and occupation. To do this, they require a government-issued identification document such as a driver's licence, passport, or residency card.

REALTORS® are to track the amounts and source of funds received during the course of a real estate transaction. The Act also requires these identification records and FINTRAC reports be kept for five years.

"The public needs to be aware that REALTORS® are asking for this personal information to comply with the new federal laws," said Dave Watt, president of the Real Estate Board of Greater Vancouver (REBGV). "The information received will not be used in any commercial way and will not be provided to anyone else except in response to a request from the federal agency responsible for compliance."

If the client is a corporation, that information must include corporate documentation and the names of the corporation directors. REALTORS® are further obligated to ascertain whether a third party is involved in a given transaction.

These new compliance requirements affect even a buyer or seller not using the services of a licensed real estate practitioner or lawyer. If there is a REALTOR® involved in the transaction, he or she must make the best effort to verify the unrepresented private buyer or seller's information.

Also under the new FINTRAC regulations, REALTORS® need to verify the personal information of clients with whom they have no face-to-face interaction. One way to do this is for the broker office to hire an agent in the area where the client is located. That agent must then meet the client, verify the identification of the client, and provide the information to the office actually handling the transaction in Canada.