I cannot tell you how often salespeople complain to me about having to comply with all FINTRAC identification requirements when meeting potential clients. Remember, lawyers have the same obligations. Rather than look at this exercise negatively, I want you to consider five reasons why following the FINTRAC requirements will not only keep you out of trouble, but will also increase your referrals.
1. When lenders are suspicious, deals don’t close
Since lenders have started being more careful in qualifying buyers, there is much more oversight taking place, even on the day of closing. It is not uncommon to see appraisals being required very close to the final closing date.
It is not just about verifying employment or gift letters. I have seen lenders refuse to complete a transaction when the client’s driver’s license or passport expired just before the closing date. Lenders are also suspicious when a deposit for a home purchase comes from multiple bank accounts at different institutions. By being careful to check identification properly when you meet a client and verifying where the deposit is coming from, you are making sure your deal will close on time.
2. How did you find me?
This is the most important question to ask any potential buyer prospect who contacts you to assist them in buying a home. If the answer is a referral or other relationship that you know, it is very unlikely that this will lead to issues later. However, if the answer is, “I found you on the Internet”, probe further.
A Realtor told me recently that they were contacted by an overseas investor who wanted to purchase a local property and would pay the deposit through a local stock broker. They gave a passport and other identification with their home address. Using Google Earth, the salesperson looked up the address and right away the building looked suspicious. After further due diligence, he quickly contacted the authorities and refused any further contact with this person.
3. Protect your brand image
Scam artists or thieves can destroy the reputation of a salesperson or broker, even if the real estate professional is innocent. It doesn’t matter. If a newspaper or online service picks up the story, any time your name is Googled, the association with the crook will also show up. This is why checking out identification and asking the right questions right away will prevent you from falling into a scam situation.
For example, let’s say a scam artist buyer ties up a property by giving you a phony deposit. If there is a bidding war and you lose other legitimate buyers, your seller is going to be very upset. Our law firm now accepts only wire transfers, so we can be sure that the funds in our trust account are verified instantly.
4. Knowing your clients builds relationships
Successful coaches will tell you that to build relationships with new prospects, ask them to tell you about themselves, their families and what they do for a living. In my practice, I enjoy talking to clients about what they do. If the client says they are retired, I ask what they did before they retired. People are proud of their careers. By being interested and asking questions, not only will you fill out the form properly, but more importantly, you will start building a relationship with this client that will lead to repeat business and referrals.
5. Be able to satisfy any FINTRAC auditor
More and more brokerage firms across the country are being audited for FINTRAC compliance. While most firms do not accept cash deposits, the list of violations I have seen includes not completing the identification forms properly, not having proper training or FINTRAC policies for both Realtors and company employees in place, and not preparing proper risk assessments every two years. My seminar, How to Survive a FINTRAC Audit, continues to be very popular in Ontario.
By understanding the benefits of FINTRAC compliance, this will hopefully assist you in explaining the forms to your clients as well as salespeople and company employees.
Mark Weisleder is a senior partner, author and speaker at the law firm RealEstateLawyers.ca LLP. Contact him at mark@realestatelawyers.ca or toll free at 1-888-876-5529.
