Canada Gazette, Part I, Volume 158, Number 27: Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting)

Please be advised that the consultation period for this proposed regulation is now closed. Submitted comments can be consulted by browsing this page. Please note that comments containing inappropriate content have been moderated or removed. Comments posted on our website are made by external sources. The Canada Gazette is not responsible for the accuracy, reliability or relevancy of the comments made by external sources. Comments may only be available in the language they were submitted in. If you have concerns, please contact us using our Contact the Canada Gazette Directorate page.

July 6, 2024

Statutory authority
Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Sponsoring department
Department of Finance

REGULATORY IMPACT ANALYSIS STATEMENT

For the Regulatory Impact Analysis Statement, see the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Money Services Business Registration).

General Comment

View comments for the General Comment section 9 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 9
1 to 5 of 9 entries
  • INTRODUCTION The exploitation of real estate by criminals for money laundering is well recognized and the Canadian Title Insurance Industry fully supports FINTRAC’s efforts to combat money laundering in the real estate sector. However, it is important that any regulation of title insurers under the PCMLTFA be implemented on a basis that is in keeping with the role that title insurers play in real estate transactions and the money laundering and terrorist financing risks to which they are exposed. Unlike title insurers in the US, in Canada, title insurance companies do not have any direct contact with our insureds at the time an order for title insurance is placed. Our focus is on the title to the real property, not the individual insured. The information we obtain in order to provide a title insurance policy is very limited and is focused on the title to the real property. We obtain that information from lawyers and notaries who order the policy for the ultimate insureds for whom they act on the real estate transaction and with whom they have a solicitor-client relationship. It should be noted that where a person requires a title insurance policy in connection with a real estate purchase, in most circumstances, the client will already have had contact with an entity that is regulated under the PCMLTFA (and therefore they will have had their identity verified and had full KYC performed). For example, when a person is dealing with a real estate agent to purchase a home, the real estate agent will have verified the purchaser’s identity. Where the purchaser obtains a mortgage for the property they are purchasing, the bank, credit union, mortgage lender or broker will have also performed identity verification. It is respectfully submitted that these parties are in a much better position than a title insurance company to obtain KYC information from a purchaser. The title insurance company never meets with or interacts with the purchaser, issues the policy on the property on the day of closing and has no further interaction with the purchaser. In fact, they have no knowledge of when the property is sold. Title insurance companies issue thousands of policies in a day. Policies are typically ordered only a few days before closing, or even on the day of closing. As such, not only would the requirement to perform KYC on all purchasers be duplicative of KYC performed by other regulated entities, but given the sheer volume of transactions, it would be physically impossible. Even utilizing lawyers or notaries to act as agents would not be terribly helpful as it would be impossible to review all the documentation they would need to provide us. We note that given that the title insurance is insurance on the title to the property, contact information for the purchaser is not necessary for a title insurance policy to be issued, nor is information collected about the occupation of any party or the source of funds used for the transaction. For the vast majority of residential transactions, the details regarding the transaction are provided by the lawyer/notary and are pre-populated into the policy which the lawyer/notary can print in their office. Unless there is a flag on the file or the lawyer/notary is seeking an underwriting decision for a known defect, no one at the title insurance provider will review the transaction; it is an automated process. The reason for this is that the role of the title insurer is to address the title to the property – it is the title to the property that is paramount, not the parties to the transaction. Accordingly, title insurers do not have any direct contact with the purchaser and instead only interact with the lawyer/notary acting for the purchaser. Title insurers rely on obtaining information from the lawyer/notary acting for the purchaser and, to the extent that the PCMLTFA imposes the need to gather information that is not required for the purpose a title insurance policy, this may raise the issue of solicitor-client privilege, which is a key issue raised in the 2015 Supreme Court decision between the Department of Finance, FINTRAC and the Federation of Law Societies, et al. On transactions that are flagged for additional title fraud review, an underwriter reviews the transaction in detail and if warranted, information is requested from the lawyer/notary. On some of these flagged transactions, the title insurer will contact the lawyer or notary to request that the homeowner complete a multi-factor authentication process using technology (generally via a cell phone) in order to authenticate identity. We do note that we receive a small number of title fraud claims per year (although the dollar amount can be large in the aggregate) which are reported to the police. RECOMMENDATIONS Accordingly, while we are aligned to being regulated under the PCMLTFA as an industry, it must be a balanced regulatory approach, keeping the fundamental principles of the risk-based approach in mind and the role that title insurance companies in Canada play in the real estate ecosystem, including the timing of when title insurance orders are placed. In that regard, a risk-based approach involves tailoring the regulatory regime to fit the assessed risks. From an anti-money laundering perspective, while title insurance companies do have a role in the real estate ecosystem, their services cannot be used to launder funds and they have no visibility into the underlying parties to the transaction. They do, however, at times have visibility into potential fraudulent title transactions involving impersonation. It is that transactional information that can be leveraged to identify trends and recognize title fraud in real estate transactions. Accordingly, we would recommend that title insurance companies be subject to the PCMLTFA in the following manner: Requirement to: 1. Appoint a person who is to be responsible for implementing the program; 2. Develop and apply written compliance policies and procedures that are kept up to date and, in the case of an entity, are approved by a senior officer; 3. Assessing and documenting the risk referred to in subsection 9.6(2) of the Act, taking into consideration the below, but in a manner that is consistent with the business model of title insurers: a. Clients and business relationships, b. Products, services and delivery channels, c. Geographic location of their activities, d. Any other relevant factor; 4. Develop and maintain a written, ongoing compliance training program for employees, agents or mandataries or other persons; 5. Institute and document a plan for the ongoing compliance training program and delivering the training; and 6. Institute and document a plan for a review of the compliance program for the purpose of testing its effectiveness. REPORTING Suspicious Transactions Title insurance companies would be able to leverage the information we obtain from real estate transactions and report STRs (with the limited information we obtain - we note the FINTRAC STR form requests information that we do not have and will not be able to complete) where we had a purchase transaction that was flagged for title fraud and where, after our typical due diligence, we did not agree to insure the transaction (often because the ID could not be verified). We would also report where we determine in the context of a claim that there is a known title fraud on a purchase transaction. We would provide the information that we have in our order process and not be required to make further inquiries to gather more information to complete the STR form. It must be noted that the decision not to insure is subjective and risk based, and decisions by different title insurers based on the same set of facts may vary. As an industry, we share the desire to reduce title fraud. In that respect, we would be happy to assist FINTRAC in developing STR red flag indicators for the industry. In respect of other reporting, where title insurers are not involved in the flow of funds, there would be no reason to have reporting or record keeping obligations in respect of large cash, virtual currency or electronic funds transfers. Know Your Client (“KYC”) Requiring a title insurance company to conduct any type of KYC on purchasers (including any PEP determinations, third party determinations, or any beneficial ownership determination) is simply not feasible. Leaving aside the fact that there is no direct contact between the title insurance company and the purchaser, from a practical perspective, the volume of orders and timing in which we are required to issue title insurance policies would make it difficult, if not impossible for title insurers to perform any KYC within the requisite time periods before closing, leading to potential transactional delays, the ripple effect of which (on purchasers, sellers, borrowers, lenders, moving companies, lawyers, real estate agents and others) would create significant disruption to the real estate closing process – potentially delaying or preventing the timely completion of closings undermining trust in the conveyancing system, and significantly increasing the costs of buying and selling a home. This in turn could affect the entire viability of the use of title insurance in real estate closings. In addition, from a privacy perspective, there are significant concerns regarding the quantity of personal information that would be collected and retained by title insurers if title insurers are required to conduct KYC on all insureds. In a relatively short period of time, we calculate that title insurers would hold personally identifiable information on a significant portion of Canadian homeowners, which would make the title insurers targets for cybercriminals. We believe that our KYC should be proportionate to the benefit that FINTRAC will receive and take into consideration additional risk from a privacy perspective to which homeowners may be exposed. Our recommendation regarding KYC is made with this in mind. It must also be emphasized that the only practical way title insurers may fulfill KYC obligations under the PCLMLTA is for title insurers to utilize lawyers and notaries (in BC and Quebec) as our agents in order to conduct the KYC. We are prepared to use lawyers and notaries as our agents for KYC purposes, but they must be willing to act as our agents. Their willingness to do so is far from certain, particularly in light of solicitor-client privilege concerns they will have. Our KYC recommendation is contingent upon their cooperation. and we strongly encourage FINTRAC not to finalize any requirements until such time that it is determined that the Federation of Law Societies, and the individual Law Societies/Notaries lawyers/notaries are willing to act as agents for title insurer PCMLTFA KYC obligations. Without the use of lawyers and notaries as our agents, there is no practical manner in which title insurers may conduct KYC. Conducting KYC without the assistance of lawyers would be disruptive to consumers and our industry as it would up-end the real estate closing process, causing greater costs and delays. As to our recommendation, we note that most parties in the real estate transaction process are already (or will soon be) subject to the PCMLTFA so that their transaction will already be monitored, as will the purchaser and the seller. Specifically, lenders, mortgage brokers, and real estate agents and brokers are all themselves subject to the PCMLTFA. These parties have direct contact with the purchaser and are in a much better position to “know their client” and understand whether a transaction is in keeping with an individual’s personal circumstances than a title insurance company would be. Given the foregoing, we believe that any KYC requirements imposed on title insurance companies should be limited to those circumstances where the purchaser did not utilize the services of a real estate agent and the purchaser did not obtain mortgage financing. In these circumstances, there would have been no party to the transaction that would have verified the purchaser’s identity, and as such, from a policy perspective, this makes the most sense. It also keeps with the risk-based approach and aligned FATF principles. This also addresses our privacy concerns by limiting the personal information collected by title insurers. Our obligations would be limited to the verification of identity. Given the time constraints under which we operate in issuing policies, we would not be in a position to undertake PEP determinations, beneficial owner determinations, or third-party determinations. If the proposed amendment to paragraph 58(1)(b) is adopted, then real estate brokers or sales representatives for sellers would be required to keep information records for, and ascertain the identities of, purchasers unrepresented by real estate brokers or sales representatives. In that case, we respectfully request that title insurers be required to ascertain identities only of purchasers who are unrepresented by real estate brokers or sales reps where the sellers are also unrepresented by real estate brokers and sales representatives. In these limited circumstances where a title insurance company would be required to perform KYC, we believe that the following are the reasonable requirements that title insurers may be able to complete on purchasers. We note that for our proposal to work, as we have mentioned above, lawyers and notaries must agree to act as our agents for this KYC purpose and certain information may not be obtainable if lawyers/notaries do not agree to provide it. By way of illustration, we set out the proposed process using the Government Issued ID Method. A similar approach would apply to the other FINTRAC permitted methods. Government Issued ID Method Where a client is met in person by the lawyer or notary: 1. Lawyer or notary when placing the title insurance order provides the type of government ID used; the jurisdiction; name on the government ID; the government ID number; and expiry date of the ID; and 2. In providing the above, the lawyer or notary confirms (perhaps by checking a box or agreeing to a statement – the details need to be determined by considering each company’s order process) that the ID is not expired; that the name on the ID matches the name provided by the individual to be registered (or which is already registered on title); that the ID does not appear to be altered; and that the picture on the ID is, to the best of the lawyer/notary’s ability, the same person that they met with either in person; and, Where a client is met virtually by the lawyer or notary, the same steps are taken, but multi-factor authentication software is employed, which successfully authenticates the individual's ID. Multi-Factor Authentication In recognition that multi-factor authentication may be used more frequently in the future, it should be acceptable when a multi-factor authentication tool is used by a lawyer or notary and the title insurer is able to receive the data from that MFA test result in a direct manner which indicates the identity was successfully verified (in the manner acceptable by FINTRAC) and the ID document authenticated, that the title insurer may rely on recording that the MFA was successful; as well as the basic verification details. If the lawyer or notary provides the requisite confirmation while the title insurer will collect that information, it will not be in a position to review it given the large volumes of transactions that it processes on a daily basis. It would be impossible for thousands of transactions to be manually reviewed by title insurers. Accordingly, we would expect that the legislation would allow us to rely on agents that we have contracted with to verify identity in good faith. We wish to emphasize however that we need to determine if lawyers and notaries are willing to act as an agent, complying only with the limited KYC obligations we reference above, and to the extent that FINTRAC may be having conversations with law societies and notary societies we would encourage participation by title insurers in those discussions. Title insurers would be permitted to rely on the agreement that they have with lawyers and notaries regarding the provisions of KYC as an agent and should not be held responsible for the failure of a lawyer or notary to comply with the agreement as long as the title insurer has a robust program of periodic random quality assurance auditing of the lawyer or notary’s service as an agent. Other Matters In respect of ongoing monitoring, because we do not have any ongoing relationships with the purchasers whose title to property we insure or obtain any client contact information and given that once premiums are paid, there is no further need for communications, there is really nothing that title insurers are in a position to “monitor.” Unlike banks or other financial institutions, we do not hold or disburse purchase funds or receive ongoing payments into an account. Given the nature of our business, we do not perform any negative or adverse media reviews in respect of purchasers so we would not collect the type of information that other regulated institutions do. Importantly, the act of providing a title insurance policy should not be viewed as creating a business relationship requiring periodic verification of identity. As mentioned in our discussion with respect to KYC, we do not have contact with the insureds; we do not have their phone number, email, or confirmation of their residence address (a property they purchase may not be their residence); and (other than if an insured files a claim) we do not contact the insureds after their policy is issued (policies last for as long as the insured has an interest in the land and there are no renewals required). We note the following from FATF’s Risk-Based Guidance to the Real Estate sector (July 2022) (“FATF Guidance”) which is consistent with our position: Sales of property typically take place as occasional transactions rather than business relationships that result in the routine transfer of funds. Most buyers seek only one or two properties in their lifetime and consequently do not commonly enter an ongoing relationship with their agent. This makes ongoing monitoring a less relevant means of identifying suspicious transactions. Accordingly, given the business model of title insurers, we do not believe that any ongoing monitoring is appropriate or necessary. We believe that any regulation of the title insurance industry under the PCMLTFA should focus on the area where we can contribute meaningfully, which is to report STRs in respect of real estate title fraud, and that any regulation should recognize the unique nature of the relationship between the title insurer and the insured-that being one single transaction at one point in time. As noted above, we have no way of even knowing what the current contact information of the insureds might be to reach out to them in the future and we do not know when the policy expires. As noted in the FATF Guidance, a risk-based approach to AML/CFT means that measures taken to reduce ML/TF are proportionate to the risks. The FATF Guidance goes on to provide the following: Supervisors should note that under the RBA [risk-based approach], particularly in the real estate sector, given the diversity in size, scale of operations, business models, and domestic regulatory requirements, there may be valid reasons for differences in controls. There is, therefore, no one-size-fits-all approach and in evaluating the adequacy of their RBA, supervisors should take into consideration the merits of these differences, applying a proportionate response. CONCLUSION We would be happy to work with you to develop a compliance regime that is appropriate for the title insurance industry using the above noted principles and an overall risk-based approach.

    Chicago Title Insurance, FCT, LAWPRO and Stewart Title Insurance

    2024-08-02

  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • I am writing to provide the CLHIA’s comments on proposed regulations expanding insurers’ terrorist property reporting obligations to FINTRAC. At present, insurers must submit a report to FINTRAC if they hold terrorist property under section 83.1 of the Criminal Code or section 8 of the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism. Recent legislative changes now expand FINTRAC’s role beyond money laundering and terrorist financing to include sanctions evasion. As such, reporting entity obligations will extend to property held by all sanctioned individuals, including under the Special Economic Measures Act, the Justice for Victims of Corrupt Foreign Officials Act (Magnitsky Act) and Regulations under the United Nations Act. Insurance companies are already subject to all of these statutes beyond the AML-ATF regime, some of which trigger reporting requirements to RCMP, CSIS, and the insurer’s primary regulator--for federally-regulated entities this is OSFI, and monthly reporting is required under OSFI-525 and OSFI-590 reports. Since FINTRAC will now receive reports on all sanctioned property, we suggest that reporting requirements could be streamlined if FINTRAC were the only federal agency that needs to be notified. In turn, FINTRAC could use its authority to share information with OSFI, RCMP, and CSIS to transmit the information on to those agencies. Thank you for considering our suggestion.

    Canadian Life and Health Insurance Association

    2024-08-13

  • The Canadian Real Estate Association (“CREA”) is one of Canada’s largest single-industry associations. Our membership includes over 160,000 real estate brokers and sales representatives, working through local real estate Boards and Associations across Canada. 1. Overview CREA welcomes this opportunity to provide its views on the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting (“Regulations”). CREA consents to the disclosure of these comments in their entirety. In general, CREA supports changes to Canada’s anti-money laundering (AML) regime that encourage the development of innovative solutions to tackle money laundering and terrorist financing. Money laundering has been recognized as a global challenge and REALTORS® are prepared to do their part to help combat it. 2. Compliance Burden and Coming Into Force Date That said, it is important to recognize that each incremental change in Canada’s AML regime imposes a compliance burden. While a specific change may seem small, the accumulation of changes can, over time, have a real and lasting impact on REALTORS®. Moreover, operationalizing even one change can take significant time and energy. This is why CREA believes that the Department of Finance has seriously underestimated the compliance burden, as stated in the Regulatory Impact Analysis Assessment (RIAS) accompanying the Regulations, that the proposed changes will impose on REALTORS®, many of whom operate small businesses. In this case, CREA is particularly concerned with the burden associated with two changes to the Regulations: (i) the new obligation to report sanctioned property; and (ii) the obligation to identify unrepresented parties. With respect to the new obligation to identify unrepresented parties, the RIAS states that “Relevant stakeholders have been consulted, are aware of these changes, and have indicated their readiness to implement the changes.” It is unclear which “relevant stakeholders” this statement is referring to, but it is important to recognize that many REALTORS® use standardized industry forms in order to comply with Canada’s AML regime. CREA, for example, publishes templated identification information forms for REALTORS® to use when ID’ing unrepresented parties. These forms will need to be modified, translated and communicated to REALTORS® if they are to conform to the new requirement. Further, REALTORS® will also need to review and update their existing compliance programs, as well as associated training, in order to ensure they have an up-to-date compliance regime. This will also take time. The above concerns apply just as much, if not more so, with respect to sanctioned property reporting, which is an entirely new requirement under Canada’s AML regime. The RIAS itself notes “[t]ypically, it could be assumed that small stakeholders must expend extra time and effort to familiarize themselves with the sanctioned property obligations and to update their systems…”. CREA agrees entirely; small stakeholders, such as REALTORS®, will expend extra time and effort to familiarize themselves with the new requirement. To compound the problem, as you may be aware, earlier this year FINTRAC’s WEB Reporting System, the mechanism by which most REALTORS® report transactions to FINTRAC, was impacted by a cyber incident. It is currently unavailable - meaning that REALTORS® cannot submit any reports to FINTRAC. CREA understands it will be several more months before FINTRAC’s systems are back online. Implementing a new reporting requirement before FINTRAC has done so could lead to confusion and undermine the credibility of Canada’s AML regime. For all the above reasons, CREA believes that the proposed coming into force dates for ID’ing unrepresented individuals and sanctioned property reporting (immediately or 60-days-8 months respectively), is frankly, unrealistic. Indeed, this is even more evident when contrasting these short dates with the one-year period for other changes in the Regulations impacting MSBs, white-label ATMS and title insurers. The overall impression one is left with is that the Department of Finance is more sympathetic to the compliance burden impacting big business, such as title insurers, than small business such as REALTORS®. Numerous regulatory changes to Canada’s AML regime have been implemented in the past with a coming into force one-year after publication in the Canada Gazette. At a minimum, CREA recommends that a similar one year coming into force date for the ID’ing unrepresented individuals and sanctioned property reporting requirements be implemented here. FINTRAC should also publish updated guidance well before this deadline is reached. 4. Unaddressed Gaps Given the attention to adding additional obligations on REALTORS® in the proposed Regulations, CREA continues to be concerned and confused why more obvious omissions continue to be overlooked. As CREA has noted in the past, real estate can be sold directly by individuals without the involvement of a REALTOR® or other real estate professional. Such transactions are vulnerable as they can be conducted without the transparency and examination required when using a REALTOR®. For this reason, CREA believes that AML obligations applicable to brokers and sales representatives should be extended to the “for sale by owner” companies who facilitate such transactions. This gap was recognized by the Government’s 2023 Consultation Paper1 and should be implemented as soon as possible. Further, the proposed Regulations do nothing to impose any obligations on lawyers to comply with Canada’s AML Regime. This is the case despite the fact that the omission of lawyers was (a) highlighted by the FATF in its 2016 mutual evaluation of Canada2; and (b) the 2018 Parliamentary Review report recommended that “that the Government of Canada bring the legal profession into the AML/ATF regime in a constitutionally compliant way with the goal of ensuring that the Canadian standards set by the PCMLTFA protect against money laundering and terrorist financing.”3 5. Conclusion In sum, it is recommended that: • Change the implementation date for the proposed Regulations related to identifying unrepresented parties and sanctioned property reporting to, at a minimum, one-year after publication in the Canada Gazette. • The Government of Canada take steps to require lawyers and “for sale by owner” companies who facilitate real estate transactions to comply with Canada’s AML regime.

    The Canadian Real Estate Association

    2024-08-13

  • Dear Director General; Re: [PARTS I to IV of] Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime Thank you for the publication of your June 6, 2023 document entitled “Consultation on Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime” (the “Consultation”) and for your invitation to provide comment and feedback via e-mail. Please consider the following to be a “Consultation Submission” from the undersigned. I consent to public disclosure of my comments and my identity. This submission relates solely to the Consultation’s questions with respect to title insurers found on its Page 56. I make no comment, and have no opinion, on extending the AML/ATF framework to mortgage insurers. I submit however that you must extend the AML/ATF framework to title insurers. Canada’s failure to recognize the role played by title insurers in property transactions is a failure in a sector that is highly vulnerable to money laundering. As the title insurance industry in Canada is wholly dominated by three US based companies our failure to extend our AML/ATF framework to those companies contrasts negatively with the American framework. Given the role played by those same title insurers in the US it would not surprise me if this failure has contributed to “negative perceptions of Canada as a jurisdiction that is not hostile to money laundering or other financial and profit-motivated crime despite the significant efforts that have been made to crack down on these crimes”. (Page 6 of the Consultation) I have broken this submission into the following Sections: I. A brief description of my background to enable you to understand how I have come to my opinions; II. A more complete description of title insurance and the title insurance industry to help explain the central, not peripheral, role played by these insurers in Canadian property conveyancing and in Canadian property financing; III. A brief description of the evolving AML/ATF regulatory regime as it has been negotiated between the American Land Titles Association (ALTA) and the Financial Crimes Enforcement Network (FinCEN) in the US; IV. The tie between title insurance and Beneficial Ownership created by nominees not being insurable; V. The impact of title insurance on issues related to Solicitor/Client privilege; and VI. Why title insurers “Keep Open” everything, and forever. I. The Author To carry on business in Canada a title insurer, together with its forms of policy, must be approved by each of our mortgage lenders and also by each of the mortgage default insurers (additional named “Insureds” in the Loan policies). Having been through the process twice I know these approvals take roughly two years to obtain. Other than by generally applicable P&C Insurer regulation title insurance is essentially unregulated in Canada. I have no financial interest in the outcome of your Consultation process. II. The Industry in Canada In the Consultation you describe Title Insurance as follows: “Title insurance is an insurance policy that protects residential or commercial property owners and/or their lenders (depending on the policy) against losses related to the property’s title or ownership. Given their role as an insurer for title to a property, title insurers gather a wide variety of information on both the insured individual(s) or entity(ies) and the insured property. The comprehensive set of information title insurers collect could possibly be leveraged to identify transactions presenting indicators associated with suspicions of money laundering and title fraud. Recent cases of title fraud have highlighted the dangers of this type of crime, where fraudsters steal ownership of a home to benefit from its value. However, title insurance is not mandatory in Canada and its usage varies greatly among provinces.” (Consultation P.56) With the greatest respect, while a common description, this description is incomplete. It is incomplete to the point of being misleading. It is likely a description that an insurer trying to avoid being made subject to Canada’s AML/ATF framework would favour, perhaps even promote. Three fundamental concepts are missing from the description: 1. Title insurance Lender policies insure the enforceability and the priority of the insured lender’s mortgage against the borrower’s ownership interest in the property. That interest (the “title”) might be squeaky clean but the mortgage itself may not be enforceable, or may not have the expected priority, because the mortgage (or a discharge, or postponement) was executed fraudulently by a criminal laundering money. There are any number of reasons that a mortgage may not be enforceable, or in its expected priority (no matter how pristine the “title”), and all are directly relevant to the AML/ATF framework; 2. Title insurance Owner policies insure property owners that they in fact own their property. Some policies also insure those owners against actual loss they may suffer if, for example, someone sells or mortgages their property without their knowledge. If an insured Owner has purchased their property from a criminal laundering money, or if another criminal fraudulently mortgages – or sells - their property, title insurance is engaged; 3. If there is activity of the type used to launder money through real estate it isn’t the realtor; the lawyer/notary; the mortgage broker; or even the mortgage lender that “wears” the risk caused by that activity. It is the title insurer. It is the title insurer that will be writing a claim cheque to the Lender or the Owner. It is the title insurer that has the most interest in, and looks the hardest for, the kinds of scams used in laundering money through real estate. These insurers are the transaction participants that employ certified fraud examiners – not the Realtors, Mortgage Brokers, Lawyers or even the Banks themselves. Fraud isn’t any of their risk – it has been assumed by the title insurers. I turn now to the contention that title insurance is “not mandatory” and that its usage “varies greatly” across the country. In fact, title insurance is far more common, even more mandatory, than most realize. There are three very different title insurance businesses in Canada: Lender Programs; Lawyer/Notary Residential business and Lawyer/Notary Commercial business. I will start with the largest of the three. Lender Programs Although licensed in Canada since the 1950’s, the US based title insurers did not have domestic Canadian success until the 1990’s. In the interim they existed principally to insure the occasional Canadian property in an otherwise largely US based property portfolio financing or sale. In the 1990’s I was part of a team at FCT that designed a wholly new mortgage fulfillment process for Canada Trust’s “Powerline” Home Equity Line of Credit (HELOC). In the then existing fulfillment paradigm Canada Trust would complete their credit underwriting and send their file to a local law/notarial firm. That firm would conduct the due diligence required of their Regulator to position the lawyer/notary to deliver its legal opinion that the HELOC mortgage was enforceable and registered in the priority expected by the Lender. The process could take a couple of weeks and (in the 1990’s) would cost the HELOC borrower between $1,000 and $2,000 in fees and disbursements. We deconstructed that process. Thanks to the electronic and remotely searchable Registry systems then being developed; the ability of email to move documents; and the ability to move money electronically we were able to design a whole new fulfillment process for Canada Trust. For $395 (now closer to $500) FCT completely replaced lawyers and notaries on HELOC transactions. The then nascent technologies combined with the risk assumption capacity of the title insurer allowed us to close these transactions in 24-48 hours. Roughly $100 of our fee covered searching the title and preparing the mortgage documents. Another $100 covered confirming the Borrower’s ID and getting the mortgage executed. A third $100 covered fees for registering the mortgage (sometimes also discharging or postponing another mortgage) and disbursing the proceeds. The final part of the fee is premium, the part that as Chief Title Underwriter I was most interested in receiving to insure the Lender their newly registered mortgage was enforceable, in the expected priority, against the Borrower(s) title. Canada Trust/TD’s, success with the Powerline HELOC led every Bank to follow. I believe one in five Canadian households is today encumbered by one of these HELOC’s. The Lender Program business has grown to include Re-Finances and “Switches” (when Borrowers change lenders). Fulfilling every HELOC, Re-Finance and Switch in the Country is now a huge business closing thousands of transaction weekly. No lawyers are involved. The borrowers get no legal advice. Canadian mortgage lenders do not receive a legal opinion after the closing of any of these transactions. They receive a title insurance policy. More precisely, they receive a confirmation number confirming that the enforceability and priority of their mortgage is insured pursuant to the master policy attached to a periodically re-negotiated service agreement between the lender and one of the two US based title insurers that own this business. To my knowledge no Canadian lender mandates that any of these non-purchase money mortgage transactions be completed using one of these Lender Programs. The Banks’ customer was, and I believe still is, able to ask that the file be sent to a law firm to be fulfilled in the traditional way. Given the traditional method costs two to three times more, and takes 2-3 weeks rather than 24-48 hours, I don’t believe many Canadian HELOC’s, Re-Finances or Switches are presently sent to a lawyer or notary’s office. Private mortgages may still be fulfilled by a lawyer, but that lawyer likely orders a title insurance policy rather than issue an opinion. There are only two companies that participate in this business in Canada. FCT, a wholly owned subsidiary of First American Financial (FAF-NYSE) a public company based in Santa Ana, California with $US 6.05B in market cap; and FNF/Chicago, a wholly owned subsidiary of Fidelity National Financial (FNF-NYSE) a public company based in Jacksonville, Florida with $US 10.2B in market cap. FCT and FNF/Chicago are OSFI regulated foreign Property & Casualty insurers licensed by Provincial and Territorial insurance regulators to sell title insurance in each of the Provinces and Territories. FCT has contracts with every Schedule “A” lender and many of the “B” lenders. FNF/Chicago has been seen as an “alternative service provider” by the Schedule “A” Banks but I believe get most of their business from the “B” lenders. From an AML/ATF perspective it is important to note that no lawyers or notaries are involved in these transactions, thousands of which close weekly in Canada. FCT and FNF/Chicago conduct the searches required by their internal underwriting standards (not any Law Society’s). The title insurers confirm the identity of the Borrowers. The title insurers attend to the execution and registration of the documents required to fulfill the transaction. They handle payouts of senior mortgages and other disbursements. It is the title insurers that confirm the property is in fact owned in the way the Bank’s customer told them it was owned. It is the title insurer that registers the discharge after a Re-Finance or a Switch. Most importantly from the AML/ATF perspective, it is the title insurer that applies the brakes on the transaction if anything seems suspicious. They do so not to fulfill a regulatory obligation – they have none - but to prevent claims. The title insurers bear the risk of fraud or anything else that may make the mortgage unenforceable against the title to the property. It is a complete mystery to me that these financial institutions have not been made a part of Canada’s AML/ATF framework to date. In Section III of this submission, I will describe some of the regulatory relationship between FinCEN and the American Land Titles Association (“ALTA”). It is important to note here, however, that title insurers in the US do not conduct this Lender Program business the way it has evolved in Canada. What has developed in Canada was made in Canada out of a combination of the risk assumption capacity of the insurer and the technology behind electronic registries, document production and money transfers. It was also assisted by the concentrated nature of the Canadian mortgage lending market. It is worth noting that in addition to the coverage afforded Mortgage Lenders by the policies each of the Lenders has contracts (that include service standards) with the two Insurers that participate in this business. There are contractual protections for the Lenders in addition to the protections found in the Lender Policy. None of this Lender Program business is regulated in Canada. One assumes the Canadian title industry enjoys being un-regulated and would not want to be required to comply within any AML/ATF framework. In my view this is short sighted. Knowing that the title insurer fulfilling the HELOC, Re-Finance or Switch transaction is a FINTRAC Reporting Entity should deter criminals from real estate transactions, and necessarily reduce the number of claims that need to be paid out by the title insurers – the largest claims being where the HELOC; Re-Financed; or Switched mortgage is wholly unenforceable due to fraud. Lawyer/Notary Residential Business Residential purchase transactions, distinct from the non-purchase money mortgage transactions discussed in the previous section, continue to involve lawyers and notaries in Canada. What is not largely appreciated however is that lawyers and notaries, in most of the country, no longer issue title opinions on home purchase transactions. On every purchase in Ontario, most in BC and Atlantic Canada, together with many in Quebec and on the Prairie Provinces the lawyer or notary’s legal opinion has been replaced by Owner and Lender title insurance policies. Lawyers, indeed the legal profession as a whole, are generally loathe to admit it but lawyers and notaries today act as agents of the title insurers. They no longer conduct the due diligence required by their respective regulator to meet the standard of care required to avoid being negligent and sued on their legal opinion. They aren’t opining. Lawyers conduct the due diligence and meet the other expectations of the title insurer whose policies the lawyer sells. Lawyers explain title insurance to their clients the prospective insureds; order the policy from the insurer; collect the premium on behalf of the insurer; and deliver the insurer’s policy to the insured. This is the very definition of an insurance agent. There are four market participants in this business. FCT and FNF/Chicago referenced in the previous section; Stewart Title Guaranty Company, an OSFI regulated foreign P&C insurer owned by Stewart Information Services (STC-NYSE) based in Houston, Texas with a market cap of $US 1.1B; and LawPRO. LawPRO is owned by the Law Society of Ontario. To avoid being regulated by OSFI, LawPRO has characterized itself as a “reciprocal” or “mutual” insurer that insures errors and omissions made by members of the Law Society of Ontario. LawPRO has (somehow) been licensed to sell title insurance to the general public in all ten provinces and three territories. LawPRO is the only title insurer licensed throughout Canada but not regulated as a financial institution by OSFI. Stewart is the dominant participant in this business followed by FCT and FNF/Chicago. Though competing for almost 25 years LawPRO has only 5% market share. Homebuyers are typically referred to a lawyer by a realtor or mortgage broker. The lawyer will meet with the homebuyers and ask whether they would like to buy title insurance for themselves and their mortgage lender. Most do. Once that decision is made the lawyer follows the title insurer’s protocols and due diligence requirements for closing. Most lawyers send their orders to a preferred insurer and the insurers compete to attract the higher volume law practices. There is one lawyer in Toronto that claims to close 6,000 home purchases every year. It has become a high volume, low margin business. Premium rebates paid by the title insurers to lawyers in exchange for orders have become as common as they are deplorable. Briefly described the process is as follows. The law firm uses commercially available software to input all of the particulars of the transaction. From that software each of the title insurers has an ordering platform that gets populated with the transaction details. Any detail can cause the transaction to default out of the platform. For example, the name of one of the Vendors on the Agreement of Purchase and Sale may be different from a registered owner’s name discovered by the lawyer’s search of the title. In those circumstances the law firm and the title insurer will need to work through the “underwriting pyramid” at the title insurer. I once sat at the top of such pyramids. Seemingly simple clerical errors are easily either repaired or underwritten (insured “over”) but this is where for purposes of Canada’s AML/ATF framework the title insurers become essential. The title insurers insure that their insureds are getting good and marketable title and that the lender is getting a mortgage enforceable against that title. Of course, this can mean many things but most critically the title insurer needs to be comfortable that it is the true registered owners of the property, and not a criminal laundering money through the property, that is selling the property to their prospective insureds. This is why title insurers employ certified fraud examiners as critical contributors to their underwriting processes. If the Vendor turns out to have been a criminal money launder with no right to sell the property to their Insureds, the title insurer will receive a claim – likely for the full policy amount (i.e. the purchase price of the home) when the true owners return and wonder why the Insureds are living in their house. From my perspective it is difficult to understand why title insurers have not been included in Canada’s AML/ATF framework to date. Title insurers could and should be reporting any suspicious transaction they decline to insure. They should also be required to report claims that appear to have resulted from suspicious activity. They should be required to report these not only to FINTRAC, but to each other. Presently a criminal money launderer in Canada can take a fraudulent scheme to another lawyer that uses a different title insurer and simply try again. In 2008 at FCT we determined too many claims were emanating from the law practices of roughly 10 law firms scattered across the country. I had to call the lawyers and tell them we would no longer take their orders. Frankly most had become “dupes” of criminal elements within particular communities served by the lawyer. When I called a lawyer in BC she began to cry as she told me I was putting her out of business. It turned out the other title insurers had been refusing her orders for some time. We were the last to cut her off. Title insurance may not have been mandatory in BC but she did not believe she could practice law without it, even 15 years ago. In Ontario lawyers are required to remit to LawPRO a per/transaction Real Estate Transaction Levy of roughly $70.00 whenever they open a real estate file. Lawyers are exempt from this levy if every party to the transaction (normally the Purchaser and the Lender) is title insured. In its Annual Reports to its shareholder, the Law Society of Ontario, LawPRO has reported that it has not received any Real Estate Transaction Levy income. Lawyers are either failing to remit the levy or every real estate transaction (residential and commercial) in Ontario is in fact title insured. Lawyer/Notary Commercial Business While much of the above applies to smaller (less than $5M) commercial transactions there is an important difference. The parties may still be getting title policies (Owner and Lender) but they are also, most of the time, also getting some sort of tax, corporate, lease or other opinion from a law firm. The process is not as automated and “cookie cutter” for the purchase and financing of a commercial property as it is for the purchase and financing of a residential property. Consequently, law firms are bearing some of the risk associated with a suspicious transaction and (subject to privilege issues discussed below) could be considered the appropriate Reporting Entities. While the processes for the use of title insurance on commercial transactions has not become as standard as it has on residential deals there is no reason that the insurers should not be required to report suspicious commercial transactions they are asked to insure.  Before turning to the US experience, I will make the following comment. Knowing what I know of the central role that is played today by the four title insurers in Canada, three of whom are OSFI regulated financial institutions, if I were forced to choose between requiring Mortgage Lenders or Title Insurers to report suspicious real estate transactions to FINTRAC I would choose the latter. Title insurers wear the risk of fraud, mortgage lenders and property owners are insured against fraud by the title insurers. The title insurers are in the best position – and in their own commercial interest have built the expertise - to identify suspicious transactions either directly in their Lender Programs or indirectly when lawyers act as their agents distributing their policies. III. FinCEN and ALTA The “title companies” in the US belong to a trade organization called the American Land Titles Association, or ALTA. ALTA represents 6,000 title insurance companies, title and settlement agents, independent abstracters, title searchers and real estate attorneys. ALTA is one of the most active lobbyists in Washington, DC. FNF, First American and Stewart are the largest, and the leading, members of ALTA. In 2016 the US Financial Crimes Enforcement Network (FinCEN) began to issue Geographic Targeting Orders (GTO’s) to the title insurers. When FinCEN determined that property in a particular location was being used by criminals to launder money they would issue a GTO. Under the GTO regime, FinCEN issued orders directly to the title insurers and required the insurer to impose those requirements on their authorized agents. For a reportable transaction, title insurers were required to send FinCEN three key pieces of information: (1) basic transaction information (closing date, property address and purchase price); (2) the name of the purchasing entity; and (3) beneficial ownership information about the purchasing entity. As FinCEN is reviewing the program ALTA has pushed back on some elements of the GTO regime. In particular ALTA has expressed concern about the cost of complying with the GTO’s. Given the structure of the US title industry it can be expensive and time consuming for some title insurers, many of which are small single-County businesses with less than 10 employees, to collect this information from agents and other participants. ALTA is not active in Canada. If it was it would not have thousands of members, it would have four. An insurer owned the Law Society of Ontario and three US public companies with billions of dollars of US market capital. The cost of any compliance imposed by FINTRAC would be minimal to these huge businesses. Furthermore, the Lender Programs designed by FCT and FNF/Chicago are wholly centralized in their Oakville, ON and Mississauga, ON Head Offices. They have to be. The Lender Program business cannot be carried out without full integration between the “back office” systems of the Bank and those of the title insurer. If FCT fulfills a HELOC for the Royal Bank on a home in Nanaimo, BC the data that would be of interest to Canada’s AML/ATF framework is sitting on FCT’s server in Oakville, ON. Similarly, the data provided by lawyers ordering residential or commercial policies from anywhere in the country is centrally stored by the four insurers that participate in that business. Compliance would not be expensive, or time consuming. In a February 17, 2022 letter to FinCEN, Steve Gottheim, General Counsel to ALTA makes the following recommendation: “After the past six years of complying with the temporary GTOs, ALTA believes now is the time to explore how to transition to a more permanent regulatory regime for subjecting real estate transactions to additional anti-money laundering requirements. As FinCEN explores its options, we believe that FinCEN should design narrowly tailored rules for real estate instead of subjecting title companies to expensive and unnecessary bank-like requirements.” I agree. I submit that Canada too must bring the title insurers into a more permanent regulatory regime as part of our AML/ATF framework. We don’t need to impose on them exactly the same rules that are imposed on other financial institutions but we would do well to impose reporting obligations on the title insurers operating in Canda that recognize the central and critical role being played by these insurers in every real estate transaction in the country. Failing to do so would leave a glaring hole in our AML/ATF framework. Imagine Stewart Title having to report the details of a real estate transaction ordered by an attorney in Niagara Falls, NY to FinCEN, but having no obligation to report exactly the same transaction ordered by a lawyer in Niagara Falls, ON to FINTRAC. “Snow-washing” can’t continue. IV. Nominees aren’t Insurable Title insurance policies, whether insuring the Owner or the Lender, and whether Commercial or Residential, insure only “Actual Loss”. By definition a mere nominee cannot suffer an actual loss. Only a beneficial owner can suffer actual loss. In what became a notorious early Canadian denial Stewart Title refused coverage on this basis in Nadvornianski v. Stewart Title Guaranty Company, 2006 CanLII 21787 (ON SC). Canadians learned the lesson that if you want to look to the policy for coverage, you had better order the policy in the name of the beneficial owner, not a nominee. I would love to suggest that I have just solved the nominee v. beneficial owner problems associated with laundering money through real estate but I have not. Criminals do not structure their money laundering real estate transactions with a view to claiming under an insurance policy at some later date. They prefer to be long “gone”. I raise this point however for two reasons. The first is that title insurer records can be an interesting source of information for investigators. The RCMP, for example, may have determined from a title search that Mr. and Mrs. Smith were the registered owners of a property. In the title insurer’s records however they may find that the Smith’s were in fact only nominees of Mr. and Mrs. Jones, the policyholders. At a minimum this would give the RCMP the names of Jones’. I return to Steve Gottheim’s letter for my next point. Even though the US industry is very different from the Canadian (having no equivalent Lender Programs and lacking our Bank concentration) he makes the following recommendation on behalf of ALTA: “Therefore, we recommend FinCEN develop tailored and specific transaction reporting requirements for the all-cash real estate transactions involving corporate entities, instead of imposing a traditional anti-money laundering regime like those imposed on banks. Additionally, FinCEN should wait to take further action on this topic until it has completed the regulations and protocols to implement the beneficial ownership database under the Corporate Transparency Act (CTA).” Recognizing the distinction between nominees and beneficial owners in the title insurance context suggests that in Canada any tailored regime for subjecting real estate transactions to our AML/ATF framework should be developed in concert with the Beneficial Ownership Registries being built by the Provinces.

    Individual/Individuel

    2024-08-14

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting) under paragraph 5(j)footnote a, subsection 11.12(1)footnote b and paragraphs 73(1)(b)footnote c, (c)footnote d to (f)footnote c, (j)footnote c and (l)footnote c of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act footnote e.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Erin Hunt, Director General, Financial Crimes and Security Division, Financial Sector Policy Branch, Department of Finance Canada, 90 Elgin Street, Ottawa, Ontario K1A 0G5 (email: erin.hunt@fin.gc.ca).

Ottawa, June 21, 2024

Wendy Nixon
Assistant Clerk of the Privy Council

View comments for the PROPOSED REGULATORY TEXT section 2 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 2
1 to 2 of 2 entries
  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Property Reporting, Title Insurers, Private Automated Banking Machines, Unrepresented Parties in Real Property or Immovables Transactions and Casino Disbursement Reporting)

Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations

1 (1) The definition listed person in section 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations footnote 1 is replaced by the following:

listed person or entity
means
  • (a) a terrorist group as defined in subsection 83.01(1) of the Criminal Code;
  • (b) a person or entity that is the subject of an order or regulation made under the United Nations Act; or
  • (c) a foreign state, as defined in section 2 of the Special Economic Measures Act, that is the subject of an order or regulation made under the United Nations Act. (personne ou entité inscrite)

(2) The definition listed person or entity in section 1 of the Regulations is amended by striking out “or” at the end of paragraph (b) and by replacing paragraph (c) with the following:

2 (1) Subsection 10(1) of the Regulations is replaced by the following:

10 (1) Subject to section 11, a report made under paragraph 7.1(a) or (b) of the Act shall contain the information set out in Schedule 2.

(2) Subsection 10(1) of the Regulations is replaced by the following:

10 (1) Subject to section 11, a report made under section 7.1 of the Act shall contain the information set out in Schedule 2.

3 The heading of Schedule 2 to the Regulations is replaced by the following:

Listed Person or Entity Property Report

4 Items 2 to 11 of Part B of Schedule 2 to the Regulations are replaced by the following:

5 Part C of Schedule 2 to the Regulations is amended by adding the following after item 5:

6 Schedule 2 to the Regulations is amended by adding the following after Part C:

View comments for the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations section 2 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 2
1 to 2 of 2 entries
  • - In relation to the new definition for "listed person" with a focus to that of the criminal code in section 83.01 (1), will there be a realignment to the same in the "Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism", and if so, when, and if not, why?

    Canadian MSB Association

    2024-07-15

  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

PART C.1

Information with Respect to Listed Person or Entity That Owns, Holds or Controls Property

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

7 Subsection 1(2) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations footnote 2 is amended by adding the following in alphabetical order:

title insurer
means a person or entity that is engaged in the business of providing title insurance, as defined in the schedule to the Insurance Companies Act. (assureur de titres)

8 Paragraph 4.1(c) of the Regulations is replaced by the following:

9 Section 36 of the Regulations is amended by striking out “and” at the end of paragraph (i), by adding “and” at the end of paragraph (j) and by adding the following after paragraph (j):

10 Paragraph 58(1)(b) of the Regulations is replaced by the following:

11 The Regulations are amended by adding the following after section 64.6:

Title Insurers

64.7 A title insurer is engaged in a business or profession for the purposes of paragraph 5(j) of the Act when they provide a title insurance policy to the purchaser of real property or an immovable.

64.8 A title insurer must keep the following records in respect of every title insurance policy that they provide to the purchaser of real property or an immovable:

12 (1) Subsection 95(1) of the Regulations is amended by adding the following after paragraph (f):

(2) Subsection 95(3) of the Regulations is amended by adding by the following after paragraph (a):

(3) Subsection 95(4) of the Regulations is amended by adding by the following after paragraph (a):

13 Subsections 101(3) and (4) of the Regulations are replaced by the following:

(3) If one or more but not all of the parties to a transaction are represented by a real estate broker or sales representative, each real estate broker or sales representative shall verify the identity of the party or parties that are not represented.

14 The Regulations are amended by adding the following after section 102.1:

Title Insurers

102.2 A title insurer must

15 (1) Subsection 105(7) of the Regulations is amended by adding the following after paragraph (h.01):

(2) Paragraph 105(7)(h.1) of the Regulations is replaced by the following:

16 (1) Subsection 109(4) of the Regulations is amended by adding the following after paragraph (h.01):

(2) Paragraph 109(4)(h.1) of the Regulations is replaced by the following:

17 The Regulations are amended by adding the following after section 110:

110.1 (1) A person or entity that is required to verify a corporation’s identity in accordance with subsection 109(1) may rely on an agent or mandatary to take the measures to do so.

(2) The person or entity may rely on measures that were previously taken by an agent or mandatary to verify the corporation’s identity if the agent or mandatary was, at the time they took the measures,

(3) In order to rely, under subsection (1) or (2), on measures taken by an agent or mandatary, the person or entity must

18 (1) Subsection 112(3) of the Regulations is amended by adding the following after paragraph (h.01):

(2) Paragraph 112(3)(h.1) of the Regulations is replaced by the following:

19 Section 120.1 of the Regulations is replaced by the following:

120.1 (1) The following persons and entities must take reasonable measures to determine whether a person with whom they enter into a business relationship is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person:

(2) A person or entity referred to in any of paragraphs (1)(a) to (l) must periodically take reasonable measures to determine whether a person with whom they have a business relationship is a politically exposed foreign person, a politically exposed domestic person, a head of an international organization, a family member — referred to in subsection 2(1) — of one of those persons or a person who is closely associated with a politically exposed foreign person.

(3) A person or entity referred to in any of paragraphs (1)(a) to (i), (k) and (l) must take reasonable measures to determine whether a person from whom they receive an amount of $100,000 or more, in cash or in virtual currency, is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons.

(4) If a person or entity referred to in any of paragraphs (1)(a) to (l) — or any of their employees or officers — detects a fact that constitutes reasonable grounds to suspect that a person with whom they have a business relationship is a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member — referred to in subsection 2(1) — of, or a person who is closely associated with, one of those persons, the person or entity must take reasonable measures to determine whether they are such a person.

20 The heading of Part G of Schedule 6 to the Regulations is replaced by the following:

View comments for the PART C.1 section 4 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 4
1 to 4 of 4 entries
  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • - Wouldn't Part C.1 item 6 - "Nature of principal business of listed person or entity or their occupation" be better worded to say "Occupation or Nature of principal business of listed person or entity" and this will align with other sections referencing the same items. - no other comments

    Canadian MSB Association

    2024-07-15

  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • Does this change mean that MSBs and FMSBs no longer have the obligation to determine that a person with whom they have established a business relationship is a PEP/HIO, family member, or close associate? I assume they would still have the obligation for EFTs of $100,000 or more?

    Individual/Individuel

    2024-07-16

Information with Respect to Person or Entity That Receives Disbursement

21 Schedule 6 to the Regulations is amended by adding the following after Part G:

View comments for the Information with Respect to Person or Entity That Receives Disbursement section 3 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 3
1 to 3 of 3 entries
  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • - No comment.

    Canadian MSB Association

    2024-07-15

  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

PART H

Information with Respect to Person or Entity on Whose Behalf Disbursement is Received

Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations

22 Schedule 1 to the Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations footnote 3 is amended by adding the following after Part C:

View comments for the PART H section 3 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 3
1 to 3 of 3 entries
  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • - No comment.

    Canadian MSB Association

    2024-07-15

  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

PART D

Information with Respect to Private Automated Banking Machines for Which Applicant Provides Acquirer Services

View comments for the PART D section 2 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 2
1 to 2 of 2 entries
  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • - No Comment.

    Canadian MSB Association

    2024-07-15

Coming Into Force

23 (1) Subject to subsections (2) to (5), these Regulations come into force on the day on which they are registered.

(2) Subsections 1(1) and 2(1) and sections 3 to 6 come into force on the day on which section 181 of the Budget Implementation Act, 2023, No. 1, chapter 26 of the Statutes of Canada, 2023, comes into force, but if these Regulations are registered after that day, those provisions come into force on the day on which these Regulations are registered.

(3) Subsections 1(2) and 2(2) come into force on the day that, in the sixth month after the month in which section 181 of the Budget Implementation Act, 2023, No. 1, chapter 26 of the Statutes of Canada, 2023, comes into force, has the same calendar number as the day on which that section comes into force or, if that sixth month has no day with that number, the last day of that sixth month.

(4) Sections 7, 8, 10, 11 and 14, subsections 15(2) and 16(2), section 17, subsection 18(2) and section 19 come into force on October 1, 2025, but if these Regulations are registered after that day, those provisions come into force on the day on which these Regulations are registered.

(5) Sections 9 and 12, subsections 15(1), 16(1) and 18(1) and section 22 come into force on the day on which section 279 of the Fall Economic Statement Implementation Act, 2023, chapter 15 of the Statutes of Canada, 2024, comes into force, but if these Regulations are registered after that day, those provisions come into force on the day on which these Regulations are registered.

View comments for the Coming Into Force section 3 comment(s)

Please use the search box below to search for specific comments that you are interested in. The number of comments found is based on your search results and it will appear after the search box. In order to improve the performance of the search function, the maximum number of search result is limited to 100 comments. When applicable, pagination will be provided at the bottom to allow for ease of navigation between comments.

Total comments 3
1 to 3 of 3 entries
  • Please do not consider peaceful organizations terrorists just because you don’t agree with them.

    Individual/Individuel

    2024-08-06

  • - No Comment.

    Canadian MSB Association

    2024-07-15

  • Please do not consider peaceful organizations terrorists just because you don’t agree with them. i don’t know

    Individual/Individuel

    2024-08-06

Terms of use and Privacy notice

Terms of use

It is your responsibility to ensure that the comments you provide do not:

  • contain personal information
  • contain protected or classified information of the Government of Canada
  • express or incite discrimination on the basis of race, sex, religion, sexual orientation or against any other group protected under the Canadian Human Rights Act or the Canadian Charter of Rights and Freedoms
  • contain hateful, defamatory, or obscene language
  • contain threatening, violent, intimidating or harassing language
  • contain language contrary to any federal, provincial or territorial laws of Canada
  • constitute impersonation, advertising or spam
  • encourage or incite any criminal activity
  • contain external links
  • contain a language other than English or French
  • otherwise violate this notice

The federal institution managing the proposed regulatory change retains the right to review and remove personal information, hate speech, or other information deemed inappropriate for public posting as listed above.

Confidential Business Information should only be posted in the specific Confidential Business Information text box. In general, Confidential Business Information includes information that (i) is not publicly available, (ii) is treated in a confidential manner by the person to whose business the information relates, and (iii) has actual or potential economic value to the person or their competitors because it is not publicly available and whose disclosure would result in financial loss to the person or a material gain to their competitors. Comments that you provide in the Confidential Business Information section that satisfy this description will not be made publicly available. The federal institution managing the proposed regulatory change retains the right to post the comment publicly if it is not deemed to be Confidential Business Information.

Your comments will be posted on the Canada Gazette website for public review. However, you have the right to submit your comments anonymously. If you choose to remain anonymous, your comments will be made public and attributed to an anonymous individual. No other information about you will be made publicly available.

Comments will remain posted on the Canada Gazette website for at least 10 years.

Please note that public email is not secure, if the attachment you wish to send contains sensitive information, please contact the departmental email to discuss ways in which you can transmit sensitive information.

Privacy notice

The information you provide is collected under the authority of the Financial Administration Act, the Department of Public Works and Government Services Act, the Canada–United States–Mexico Agreement Implementation Act,and applicable regulators’ enabling statutes for the purpose of collecting comments related to the proposed regulatory changes. Your comments and documents are collected for the purpose of increasing transparency in the regulatory process and making Government more accessible to Canadians.

Personal information submitted is collected, used, disclosed, retained, and protected from unauthorized persons and/or agencies pursuant to the provisions of the Privacy Act and the Privacy Regulations. Individual names that are submitted will not be posted online but will be kept for contact if needed. The names of organizations that submit comments will be posted online.

Submitted information, including personal information, will be accessible to Public Services and Procurement Canada, who is responsible for the Canada Gazette webpage, and the federal institution managing the proposed regulatory change.

You have the right of access to and correction of your personal information. To seek access or correction of your personal information, contact the Access to Information and Privacy (ATIP) Office of the federal institution managing the proposed regulatory change.

You have the right to file a complaint to the Privacy Commission of Canada regarding any federal institution’s handling of your personal information.

The personal information provided is included in Personal Information Bank PSU 938 Outreach Activities. Individuals requesting access to their personal information under the Privacy Act should submit their request to the appropriate regulator with sufficient information for that federal institution to retrieve their personal information. For individuals who choose to submit comments anonymously, requests for their information may not be reasonably retrievable by the government institution.