Preparing for FINTRAC’s New AML Regulations Effective October 2024

Mortgage brokers will experience additional obligations of complying with anti-money laundering (AML) and anti-terrorist financing (ATF) regulations set by FINTRAC, effective October 11, 2024.

This shift makes brokers responsible for “monitoring and reporting suspicious financial activities” in the sector, similar to lenders and the real estate industry, which has been doing this for a long time.

Steps For FINTRAC AML Compliance

CEO of “Axiom Innovations,” Dong Lee, has suggested some guidelines to meet the requirements of FINTRAC despite considering uncertainties about some details. He emphasizes the significance of preparing themselves early by providing a statement.

Evaluate First, Buy Compliance Later

Brokers face difficulty in following the guidelines related to AML compliance with FINTRAC based on principles instead of based on rules. 

This implies that rather than conducting a “strict checklist,” brokers must understand and implement general rules and regulations for their business. 

Although the flexibility of a principle-based approach allows brokers to benefit, it also raises questions regarding precise requirements, particularly in “ID verification and translation monitoring.”

Lee insisted brokers stay focused and calm while buying any service related to compliance and fully understand whether it meets the FINTRAC requirements and when no uncertainty is left.

“For example, there’s been a lot of conversation around ID verification,” Lee stated.

“If you have a customer who’s been with a credit bureau for three years or longer, that technically means your ID verification is done. So, there are vendors trying to sell services that may not be necessary. In the end, your brokerage will set the tone for what’s required.” He added.

Read Also:

• Australia’s AML/CFT Law Tranche 2 Expanding Compliance Requirement
• Impact of Federal Government’s Recommended AML/CFT Guidelines On Lawyers and Other Professional Services
• SRA Announces New AML Regulations for Legal Professionals

Wake-Up Call for Ignoring AML Regulations

For brokers who might consider that these regulations will not be implemented, Lee advised them to take ‘penalties for noncompliance’ seriously as these are not restricted to big businesses. 

“Brokers may think that fines only happen to big institutional players, but the truth is that real estate brokerages have been fined too,” stated Lee. “This should be a wake-up call – it won’t just be a slap on the wrist if you don’t comply. FINTRAC is serious about this,”he added.

As a recent industry report highlights, brokers are advised to fully prepare before implementing regulations to ensure robust AML compliance and protect their firms from penalties.