FINTRAC & Real Estate: What Brokers and Developers Must Know About Suspicious Transaction Reporting
Real estate transactions are attractive to criminals seeking to launder proceeds because they can move large sums and create a veneer of legitimacy. FINTRAC recognizes this risk and explicitly lists real estate brokers, sales representatives and developers among reporting entities required to file Suspicious Transaction Reports (STRs). Understanding how to identify and report suspicious activity is essential for brokers and developers, and for avoiding regulatory and criminal liability.
FINTRAC’s expectation of real estate professionals
FINTRAC requires real estate brokers and sales representatives to submit STRs when they have reasonable grounds to suspect that a transaction or attempted transaction involves proceeds of crime or terrorist financing. FINTRAC has issued industry-specific indicators and training materials to assist real estate professionals in recognizing red flags. Importantly, there is no minimum monetary threshold for submitting an STR.
Common red flags in real estate
While no checklist captures every scenario, recurring suspicious indicators in property transactions include:
Unusual payment methods (large cash deposits or complex multi-source funding that lacks clear explanation).
Rapid interest in a property well above market value and willingness to pay in cash or via layered transfers.
Third-party purchasers where the buyer is not the ultimate beneficiary or where beneficial ownership is obscured.
Structuring transactions across multiple related parties to avoid scrutiny.
Use of shell companies or unusual trust arrangements without clear commercial reasoning.
When these indicators appear in combination, especially alongside unusual urgency or secrecy, they often justify further inquiry and, if unresolved, an STR.
How to document and escalate
When a front-line agent observes potential red flags, they should document what was observed, escalate to the designated compliance officer, and take reasonable measures to verify the source of funds and beneficial ownership. If suspicions remain after due diligence, the compliance officer should prepare and file an STR “as soon as practicable.” FINTRAC’s guidance emphasizes documenting steps taken and reasons for reporting (or not reporting) as part of a defensible compliance posture.
Practical source-of-fund checks for brokers
A practical approach includes: obtaining bank statements, letters from financial institutions, corporate documents for corporate buyers, and supporting invoices for large deposits. Use risk-based judgment: a buyer who claims to be from a jurisdiction with significant AML concerns requires proportionally more verification.
Working with lawyers and mortgage brokers
Real estate transactions usually involve lawyers and mortgage brokers. Brokers should coordinate with these professionals, but coordination does not replace the broker’s independent obligation to report. If you file an STR, you may still contact law enforcement directly, but you must also submit the STR to FINTRAC.
Training, policies and recordkeeping
Real estate brokerages should have a written AML policy, a designated compliance officer, and a training program that includes common red flags and the steps to escalate. Keep records of KYC checks, source-of-fund evidence, and notes explaining decisions. This documentation is crucial if FINTRAC initiates an examination.
Real estate professionals operate in one of the sectors most scrutinized by FINTRAC. An effective approach combines practical, risk-based due diligence with prompt escalation and clear documentation. Platino Consulting can create a real-estate-specific AML manual, a red-flag playbook, or a staff training session tailored to your brokerage.
