Creating an AML Program for a Real Estate Company
In Canada, real estate companies, including brokerages, agents, and developers, hold a unique place in the AML risk landscape. Large property transactions, high-value cash deals, and complex ownership structures make real estate a common vector for money laundering. To address this, real estate professionals must build an AML compliance program that aligns with FINTRAC’s expectations.
Here are the critical components of a real estate AML program:
Risk Assessment Specific to Real Estate: Your assessment should examine specific risk factors: third-party payments, shell company buyers, trust involvement, unusual payment methods, or cross-border clients.
Client Identification & Due Diligence: Establish formal KYC procedures for individual and corporate purchasers. For entities, verify beneficial ownership and ownership structure. Obtain and retain identity documents, source-of-funds documentation, and bank references as needed.
Transaction Monitoring & Red Flags: Develop a system or manual process to flag suspicious activities, such as unusually large down payments in cash, quick resales, or payment from unassociated third parties, and escalate them for review.
Suspicious Transaction Reporting: Establish protocols for agents and compliance officers to identify, investigate, and report suspicious activity to FINTRAC. This includes training your staff on indicators of laundering or financing red flags.
Policies & Written Procedures: Create and document policies that reflect your risk assessment, governance structure, and transactional workflows, including your escalation process for investigations.
Training & Culture: Roll out regular AML training across your sales, compliance, and back-office teams. The training should cover real estate-specific risk areas, record-keeping, and red-flag detection.
Independent Review & Effectiveness Testing: Conduct periodic reviews (e.g., every two years) to validate that your AML policies and procedures are working, that your risk assumptions remain valid, and that your staff is executing them properly.
When you invest in a strong AML compliance program, you not only mitigate regulatory risk, you also protect your clients, safeguard your reputation, and build trust in the marketplace. Contact Platino Consulting today and we can help your real estate company design, implement, and maintain such a program, tailored to your size, structure, and risk profile.
