FINTRAC clarifies the ongoing monitoring requirements of a business relationship

After several months of lobbying by CREA, FINTRAC has released a policy interpretation to clarify the ongoing monitoring requirements of a business relationship.

Several years ago FINTRAC mandated that a business relationship is formed when two transactions occur within five years with the same brokerage. This required the brokerage to conduct ongoing monitoring of the business relationship with the client as well as keep a record of the measures taken and information obtained.

Given this decision was and is contrary to the fundamental nature of REALTORS®’ business, CREA lobbied hard to change this interpretation. It is common to conduct two transactions with the same client within a five year period; therefore this interpretation caused a significant reporting burden on brokerages.

Recently FINTRAC has changed its position to state that ongoing monitoring now starts at the third transaction. A business relationship is still formed at the end of the second transaction, however, the ongoing monitoring is only required if a third transaction occurs. This will reduce both time and effort required to comply with FINTRAC.