A Canadian real estate brokerage discovers suspicious activity where a client is purchasing multiple properties with large cash payments and refuses to provide source of funds information. What is the primary FINTRAC obligation?

Q: What is the correct answer to: A Canadian real estate brokerage discovers suspicious activity where a client is purchasing multiple properties with large cash payments and refuses to provide source of funds information. What is the primary FINTRAC obligation?

The correct answer is File a Suspicious Transaction Report within 30 days. Under FINTRAC regulations, real estate brokerages must file a Suspicious Transaction Report (STR) within 30 days when they have reasonable grounds to suspect money laundering or terrorist financing. The combination of multiple large cash purchases and refusal to provide source of funds information creates clear suspicious indicators requiring an STR. This is the primary regulatory obligation that takes precedence over other actions.

Q: What background knowledge is needed for this Regulatory Compliance question?

FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) is Canada's financial intelligence unit operating under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Real estate brokerages are designated reporting entities with obligations including: filing Large Cash Transaction Reports for transactions ≥$10,000, filing Suspicious Transaction Reports within 30 days when reasonable grounds exist, maintaining compliance programs, and conducting client identification and record-keeping. Suspicious indicators include unusual payment methods, reluctance to provide information, transactions inconsistent with known business, and structuring to avoid reporting thresholds.

Q: What is a good way to remember the answer to this Regulatory Compliance question?

Remember 'STR in 30' - when you see Suspicious Transaction indicators, file the STR within 30 days. Think 'Suspicious = STR = 30 days' as your primary FINTRAC duty. When you see questions about suspicious activity in real estate transactions, immediately think '30 days for STR to FINTRAC.' Look for red flags like large cash, multiple purchases, or refusal to provide information, then select the option mentioning STR within 30 days.

Q: What exam tip applies to this Regulatory Compliance question?

For FINTRAC questions, identify if suspicious activity exists first, then remember STR filing within 30 days is the primary obligation before other actions.

Q: How does this Regulatory Compliance concept apply in real world practice?

A real estate agent notices a client purchasing three condos in cash within two months, each for $400,000, paying with bank drafts from different institutions. When asked about funding sources for due diligence, the client becomes evasive and refuses to provide employment or income verification. The agent must continue professional service while documenting the suspicious indicators and filing an STR with FINTRAC within 30 days, ensuring compliance with AML obligations while avoiding tipping off the client about the report.

Question

Regulatory ComplianceFINTRAC Anti Money LaunderingBCHARD

A Canadian real estate brokerage discovers suspicious activity where a client is purchasing multiple properties with large cash payments and refuses to provide source of funds information. What is the primary FINTRAC obligation?

Answer Options

A

File Large Cash Transaction Reports only

B

Refuse to continue representing the client immediately

C

File a Suspicious Transaction Report within 30 days

D

Report the activity to local police first