Video – Mortgage Sector: Suspicious transaction reports

This video is intended for the mortgage sector and covers suspicious transaction reports (STRs).

Video

Video length: 29:32 minutes

Catalogue number: FD4-48/2025E-MP4

ISBN: 978-0-660-78619-3

Descriptive transcript of the video “Mortgage Sector – Suspicious transaction reports”

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In the ongoing effort to protect the integrity of Canada's financial systems and combat money laundering and terrorist financing, one tool stands out for its critical importance: the Suspicious Transaction Report, or STR.

This information session covers suspicious transaction reports in the mortgage sector including what they are and what you need to do.

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Mortgage Sector
Suspicious transaction reports
What is a suspicious transaction and what you need to do

During the process of a real estate transaction, mortgage professionals are well positioned to observe suspicious activity that may occur during different stages of the transaction.

It has been observed that criminals could exploit vulnerabilities in the mortgage sector by using shell companies, nominee buyers, and fraudulent documentation to purchase real estate.

Your vigilance and prompt reporting can make a significant difference in our collective effort to prevent and deter criminal activities. Together, we can maintain the security and integrity of Canada's financial systems.

Let’s take a look at what makes a transaction suspicious.

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Threats and vulnerabilities

Mortgage professionals are well positioned to observe suspicious activity.

Exploiting vulnerabilities in the mortgage sector

Shell companies
Nominee buyers
Fraudulent documentation

A suspicious transaction is a transaction that is financial in nature, that is completed, or attempted and within which there are reasonable grounds to suspect that the transaction is related to the commission or the attempted commission of a money laundering offence or a terrorist activity financing offence.

Where there are reasonable grounds to suspect that transactions are being attempted or completed in order to evade sanctions, then you must report these transactions to FINTRAC in a Suspicious Transaction Report.

Let’s take a closer look at the components of a suspicious transaction.

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What is a suspicious transaction?

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Completed or attempted financial transaction
Reasonable grounds to suspect
Money laundering offence
Terrorist activity financing offence
Sanctions evasion offence

Suspicious transactions can be completed or attempted transactions.

A completed transaction occurs when an individual or entity moves funds, virtual currency, or makes the purchase or sale of an asset.

For example, you, as a lender, issue a mortgage commitment letter to your client and the mortgage is funded on the specified closing date. This is a completed transaction.

An attempted transaction occurs when an individual or entity starts to conduct a transaction but does not complete it for any number of reasons.

For example, you are a mortgage broker and your client applies for a mortgage, completes the application but refuses or is not able to provide identification information. As the identification information is not provided, the mortgage is declined and this becomes an attempted transaction that may become reportable.

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Completed or attempted transactions.

A completed transaction occurs when an individual or entity conducts a transaction that results in a movement of funds, virtual currency, or the purchase or sale of an asset.

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An attempted transaction occurs when an individual or entity starts to conduct a transaction but does not complete it for any number of reasons.

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A “For Sale” sign appears on screen, indicating the transaction was not completed.

“Reasonable grounds to suspect” is the required threshold to submit a Suspicious Transaction Report to FINTRAC. It is a step above “simple suspicion” but below “reasonable grounds to believe”.

To better understand “reasonable grounds to suspect”, let’s look at each of these levels.

“Simple suspicion” is a lower threshold than “reasonable grounds to suspect.” This means you only have a hunch or gut feeling that something is unusual or suspicious. But you do not have any facts, context or indicators to support your feeling or to reasonably conclude that a money laundering or terrorist activity financing offence is occurring, or that there is an evasion of sanctions.

At this point, you are not required to submit a Suspicious Transaction Report if you are simply suspicious, as the threshold has not been met.

Once you have reviewed the supporting documents and related transactions, you may elevate the threshold to “reasonable grounds to suspect” if you find information that would support or confirm your suspicion.

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Simple suspicion

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Lower threshold than reasonable grounds to suspect
Hunch or gut feeling
No facts, context or indicators to support your feeling
Do not submit a suspicious transaction report; threshold has not been met

“Reasonable grounds to suspect” is the required threshold to submit a Suspicious Transaction Report to FINTRAC.

“Reasonable grounds to suspect” means there is a possibility that a money laundering or terrorist financing offence, or an evasion of sanctions, is occurring based on the facts, context and indicators surrounding the mortgage process during pre or post funding.

You are able to present and document reasons why it is suspicious but they do not need to be proven or verified.
You must submit a Suspicious Transaction Report because the threshold for “reasonable grounds to suspect” has been met.

Text on screen: Reasonable grounds to suspect

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Higher threshold than simple suspicion
Threshold to submit a Suspicious Transaction Report
Possibility of an offence occurring
Able to present and document reasons why it is suspicious
Submit a Suspicious Transaction Report

Reasonable grounds to believe

This is a higher threshold that is beyond what is required to submit a Suspicious Transaction Report. “Reasonable grounds to believe” means that you are able to provide verified facts that support the probability that a money laundering or terrorist activity financing offence, or an evasion of sanctions, is occurring.

If you have reached the “Reasonable grounds to believe” threshold, you are required to report that suspicious transaction as you have already surpassed the level required to submit a report.

The commission of a money laundering or a terrorist activity financing offence is another component of a suspicious transaction.

Let’s take a look at each of these offences more closely.

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Reasonable grounds to believe

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Higher threshold than what is required to submit a Suspicious Transaction Report
Verified facts that support the probability that an offence is occurring
Submit a Suspicious Transaction Report

Money laundering is the process whereby dirty money produced through criminal activity is transformed into clean money, so that the criminal origin is difficult to trace.

There are 3 stages in the money laundering process.

Placement involves placing the proceeds of crime into the financial system.

Layering involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the trail, the source, and the true ownership of funds. This stage may involve transactions such as the buying and selling of stocks, commodities or property.

The last stage, integration is placing the laundered proceeds back into the economy to create the perception of legitimacy.

The offence of money laundering is outlined in the Criminal Code.

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Money laundering offence

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The offence of money laundering is outlined in the Criminal Code.

Placement
- Placing proceeds of crime into financial systems
Layering
- Creating complex layers of financial transactions
Integration
- Laundered proceeds create the perception of legitimacy

Did you know that a predicate offence to money laundering is any illegal activity or crime that generates monetary proceeds?

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Did you know…?

A predicate offence to money laundering is any illegal activity or crime that generates monetary proceeds.

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Other examples of predicate offences associated with money laundering can include:

Drug trafficking
Fraud including mortgage fraud
Human smuggling and trafficking
Tax evasion, and
Customs and excise offences

Let’s look at what terrorist financing entails.

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Predicate offences

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Drug trafficking
Fraud, including mortgage fraud
Human smuggling and trafficking
Tax evasion
Customs and excise offences

A “terrorist activity financing offence” involves knowingly collecting or giving property, such as money, to carry out terrorist activities. This includes the use and possession of any property to help carry out the terrorist activities.

The money used for terrorist financing can be:

from legal sources, such as personal donations and profits from a business or charitable organization; or
from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion.

It is an offence under the Criminal Code.

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Knowingly collecting or giving property to carry out terrorist activities
Money from legal sources
Money from criminal sources
An offence under the Criminal Code

A “sanctions evasion offence” is an offence arising from the contravention of a restriction or prohibition established by an order or a regulation made under the United Nations Act, the Special Economic Measures Act or the Justice for Victims of Corrupt Foreign Officials Act.

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Sanctions evasion offence

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A sanctions evasion offence is an offence arising from the contravention of a restriction or prohibition established by an order or a regulation made under the United Nations Act, the Special Economic Measures Act or the Justice for Victims of Corrupt Foreign Officials Act

Now that we’ve covered different types of offences, let’s explore when you should submit a Suspicious Transaction Report.

You must submit a Suspicious Transaction Report to FINTRAC as soon as practicable, after you have completed measures that enable you to determine that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission or attempted commission of a money laundering or terrorist activity financing offence.

Additionally, where there are reasonable grounds to suspect that transactions are being attempted or completed in order to evade sanctions, you must report these transactions to FINTRAC in a Suspicious Transaction Report.

Let’s look at what “as soon as practicable” and “determining reasonable grounds to suspect” means.

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When to submit a Suspicious Transaction Report

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As soon as practicable
Determined reasonable grounds to suspect
Money laundering offence
Terrorist activity financing offence
Sanctions evasion offence

“As soon as practicable” is the time period in which a Suspicious Transaction Report must be submitted to FINTRAC.

This time period falls in-between immediately and as soon as possible.

Given its importance, the completion and submission of the Suspicious Transaction Report should take priority over other tasks regardless of your role in your organization.

Therefore, you must complete the report promptly, taking into account the facts and circumstances of the situation.

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As soon as practicable

The completion and submission of the suspicious transaction report should take priority over other tasks.

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A gauge appears on screen, and the needle moves between immediately, as soon as practicable, and as soon as possible, landing back on as soon as practicable.

Determining if the threshold for “reasonable grounds to suspect” has been met can be done by using a variety of measures. your mortgage application or an active loan account to assess the facts and context surrounding each transaction, and then determine if there are any indicators that can be linked to your assessment of the facts and context.

Let’s take a closer look at what is meant by the facts, context and indicators.

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Determining the threshold for reasonable grounds to suspect threshold

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Review mortgage applications and active loan files to assess:

Facts
Context
Indicators

Facts are actual events, actions, occurrences or elements that exist or are known to have happened.

Facts are not opinions.

For example, facts about a mortgage refinance could include the date, time, type of property, mortgage payment amount, client credit report or the client's source of income.

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Determining the reasonable grounds to suspect threshold.
Facts
Context
Indicators

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Actual events, actions, occurrences or elements that exist or are known to have happened
Not opinions

Context is information that clarifies the circumstances or explains a situation or transaction.

This type of information is essential to differentiate between what may be suspicious and what may be typical or expected in a given scenario.

You may observe or understand the context of a transaction by having a general awareness of the events occurring in the borrower’s business environment or community; by being aware of the typical loan terms, conditions and maximum loan amounts that occur within your business or industry and by knowing your clients’ typical and expected transactional behaviours based on their client profile such as occupation and source of funds.

For example, a transaction may not appear suspicious in and of itself. However, a review of additional contextual elements surrounding the transaction may create suspicion.

Conversely, the context of a particular transaction, which may seem unusual or suspicious from the onset, can lead you to reassess your client's current and past transactions and conclude that they are in fact normal or usual in that circumstance.

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Determining the reasonable grounds to suspect threshold
Facts
Context
Indicators

Information that clarifies the circumstances or explains a situation or transaction.

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Information that clarifies the circumstances or explains a situation or transaction

Having a general awareness of the events occurring in the borrower’s business environment or community
Being aware of the typical loan terms, conditions and maximum loan amounts
Knowing your clients’ typical and expected transactional behaviours

Indicators are potential red flags that can initiate suspicion and indicate that something may be unusual without a reasonable explanation.

Red flags often arise when there are inconsistencies with what is expected or considered normal based on the facts and context you know about your client and their transactional activities.

Indicators can also help you express your reason for reaching the reasonable grounds to suspect threshold in a Suspicious Transaction Report.

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Determining the reasonable grounds to suspect threshold
Facts
Context
Indicators

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Three red flags pop up.

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Initiate suspicion
Arise when there are inconsistencies with what is expected or considered normal
Help explain how the threshold for reasonable grounds to suspect was reached

There are countless indicators that can be categorized into different types. In this video, we will only highlight 4 indicator types.

The first type is Client behaviour. For example, you may become suspicious when a client exhibits nervous behaviour; presents confusing details about the property or the transaction; knows few details about the purpose of the transaction; or exhibits a lack of concern about higher than normal interest costs or fees.

The next indicator type is Identification. For example, you may become suspicious when:

The ID presented by the borrower or guarantor cannot be authenticated.
There are inconsistencies in the identification documents or information provided by the borrower, such as name, address, date of birth or phone number.
The borrower provides seemingly false information or identification that appears to be counterfeited, altered or inaccurate.
The borrower displays a pattern of name variations from one transaction to another or uses aliases.
The borrower provides only a non-civic address or disguises a post office box as a civic address for the purpose of concealing their physical residence.
Common identifiers—for example, the same address and phone number—are used by multiple clients that do not appear to be related.
Attempts to verify information provided by a new or prospective client are difficult. For example, it may be difficult to verify the client’s income, employment status or credit status.

The next indicator type is Third party.
A third party is any person or entity that instructs someone to act on their behalf for a financial activity or transaction.

There are some situations where there is a valid reason for the inclusion of a third party in a transaction and this may not be suspicious. However, in a situation where the reason for a person or entity acting on behalf of another person or entity does not make sense based on what you know about the client or the third party, you may become suspicious.

Use of third parties is one method that money launderers and terrorist activity financers use to distance themselves from the proceeds of crime or the source of criminally obtained funds. By relying on other parties to conduct transactions, criminals can distance themselves from the transactions that can be directly linked to suspected money laundering, terrorist activity financing or sanctions evasion offences.

An example of a third party indicator is when unrelated parties with no apparent relation to the borrower are involved in the mortgage transaction by making the initial deposit or acting as a guarantor. Other examples are when a client conducts a transaction while accompanied, overseen or directed by another party or when a client appears to be or states they are acting on behalf of another party.

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Indicator Types

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Client behaviour

Nervous behaviour
Confusing details
Knows few details
Lack of concern

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Identification

ID cannot be authenticated
Inconsistencies in the identification documents
ID appears to be counterfeited, altered or inaccurate
Name variations or aliases
Concealing physical residence
identifiers used by multiple clients
Difficulty in verifying information

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Examples of third party indicators appear on screen.

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Third party

Unrelated parties with no apparent relation to the borrower are involved in the mortgage transaction
Client conducts a transaction while accompanied, overseen or directed by another party
Client appears to be or states they are acting on behalf of another party

A third party is any person or entity that instructs someone to act on their behalf for a financial activity or transaction.

The last indicator type that we will be highlighting in this video are indicators that are specific to the mortgage sector. Let’s take a look at some of the more prevalent ones.

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Mortgage sector indicators

Accelerated payments
Client profile
How mortgage payments are made
Industry professionals
Shell companies

The first one is accelerated payments. This occurs when a client quickly repays the mortgage shortly after closing date, even if penalties are incurred.

It also occurs when a client makes mortgage repayments over a short period of time that are not consistent with the client’s source of income.

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Accelerated payments

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A client quickly repays the mortgage shortly after closing date
A client makes mortgage repayments over a short period inconsistent with source of income

Another mortgage sector indicator is client profile.

For example, the client provides inconsistent information about their income and occupation, or the client has been identified by the media, law enforcement or intelligence agencies as being linked to criminal activities.

There have also been notable indicators where a client provides false or inflated personal income claimed to be generated from a foreign employer, or a client indicates funds are from a foreign relative.

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Client profile

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Client provides inconsistent information about their income and occupation
Client has been linked to criminal activities
Client provides false or inflated personal income from a foreign employer
Client indicates funds are from a foreign relative

How mortgage payments are made can also be an indicator.

This is especially true if cash is used to make a payment, and the cash payment is structured. Businesses that are regulated by FINTRAC and who receive cash deposits or payments from clients must report these cash amounts if they total $10,000 or more within a 24 hour period.

When cash amounts and payment dates are adjusted so that reporting to FINTRAC is not required, this may be an indication of structuring – which is a red flag or an indicator.

Other red flags may be when mortgage payments are funded with the assistance of gifted funds; when mortgage payments are withdrawn from multiple bank accounts; and when subsequent to funding, the banking information is changed to a seemingly unrelated third party.

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How mortgage payments are made

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Structuring: cash amounts and payment dates are adjusted
Mortgage payments are funded with the assistance of gifted funds
Mortgage payments are withdrawn from multiple different bank accounts
Banking information is changed to an unrelated third party

During a real estate transaction, various industry professionals may be involved and may knowingly or unknowingly play a role in mortgage fraud schemes by being listed as beneficiaries of foreign wire transfers, bank drafts or certified cheques from unknown sources.

In addition, close-knit professionals from different industries may collude during different stages of a real estate transaction to facilitate fraud schemes.

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Industry professionals

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Industry professionals knowingly or unknowingly play a role in mortgage fraud schemes
Collusion

Finally, shell or numbered companies can be used by criminals to conceal their identity and to distance themselves as the true beneficiary of the mortgage transaction.

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Shell companies

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Used by criminals to conceal their identity
Distance themselves as the true beneficiary of the mortgage transaction

We mentioned earlier that indicators should help explain your rationale for reaching the threshold for reasonable grounds to suspect in a Suspicious Transaction Report.
FINTRAC regulates other sectors, such as real estate and financial entities, and some of the indicators in these sectors can also apply to the mortgage sector.

You can review the indicators for the real estate sector and for financial entities by visiting FINTRAC’s website.

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Indicators

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Financial Entities
Real estate sector

It is important to be aware that you, as a mortgage broker, lender or administrator, may come across different facts, context and indicators because of your unique role and engagement with the client during different stages of the mortgage loan process.

Regardless of your role, it is important to assess the facts, context and indicators that you come across on a holistic basis when you are determining the threshold for reasonable grounds to suspect.

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Holistic assessment

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Facts
Context
Indicators
Reasonable grounds to suspect

For example, let’s look at a mortgage brokerage company that has two clients, Client A and Client B.

Facts: Both Client A and Client B apply for a $300,000 mortgage.

Some context: Client A and Client B are both international students.

When the mortgage agent, who is employed by the mortgage company, asks Client A for additional information based on the request of the lender, the following indicators became apparent:

Client A is not familiar with the location of the property for which the mortgage is being requested.
Client A cannot explain how he will pay off the mortgage and keeps changing his explanation.
Client A is nervous.

When the mortgage agent asks Client B for additional information, client B advises that she is buying property to have a place to reside while attending school. Client B also advises that her parents will fund the purchase and provides legitimate paperwork that supports this. The property is a condominium in the university neighborhood. No other indicators came up.

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Example – two transactions

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Facts: Client A and Client B both apply for a $300,000 mortgage

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Context: Client A and Client B are both international students

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Client B disappears.

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Indicators:

Not familiar with the location of the property
Cannot explain how he will pay off the mortgage and keeps changing his explanation
Nervous

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Client A disappears and Client B reappears.

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Indicators for Client B:

No relevant indicators
Place to reside
Legitimate supporting documentation
Property located in university neighborhood

Would you submit a Suspicious Transaction Report to FINTRAC on the transaction conducted by Client A, Client B or both?

Both transactions have the same facts and context as both involve international students applying for a $300,000 mortgage loan.

However, when more information is requested, it becomes apparent that the transaction conducted by Client A has red flags or indicators, and the transaction conducted by Client B does not. This is why it is important to use a holistic approach when you are reviewing the facts, context and
indicators for each transaction to determine if the threshold for reasonable grounds to suspect is met.

In this scenario, the mortgage agent informs its anti-money laundering compliance officer, who then submits a Suspicious Transaction Report to FINTRAC only on the transaction conducted by Client A.

Other businesses involved in the process have to make their own assessment of the facts, context and indicators to which they have access, and therefore may also be required to submit a Suspicious Transaction Report.

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Submit a transaction report to FINTRAC
Holistic approach

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Facts
Context
Indicators
Reasonable grounds to suspect
Report transaction conducted by Client A

Here are some other scenarios for you to consider.

In Scenario 1, your client is new to Canada and has a student visa. This client is purchasing property for $1 million with a 50% down payment coming from savings.

In Scenario 2, your client owns a massage therapy business in an area of town known for criminal activity. This client is looking to purchase a high-end residence. As the client is currently on vacation, the client requests that everything be done electronically.

In Scenario 3, your client is a chef who recently got a raise. The client has a letter of employment but no pay stubs to confirm. The client currently owns 2 condos and is purchasing a 3rd condo that is 2 hours away from their work location. The client provides a 15% down payment with 5% of it being a gift from a friend.

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Scenario 1 shows up on screen.

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Scenario 1

New to Canada
Student visa
Purchasing property for $1 million dollars with a 50% down payment coming from savings

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Scenario 2

Owns a massage therapy business in an area of town known for criminal activity
Looking to purchase a high-end residence
Currently on vacation and requests that everything be done electronically

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Scenario 2 disappears and scenario 3 shows up on screen.

Scenario 3

A chef who recently got a raise
Has a letter of employment but no pay stubs
Currently owns 2 condos and is purchasing a 3rd two hours away from work
15% down payment with 5% of it being a gift from a friend

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Three figures appear to represent the individuals in each scenario.

Would you submit a Suspicious Transaction Report for any of these scenarios? What are the facts? What is the context? Are there any indicators? Are you able to determine that there are reasonable grounds to suspect that a transaction or attempted transaction is related to the commission of a money laundering or terrorist activity financing offence? Are there reasonable grounds to suspect that transactions are being attempted or completed in order to evade sanctions?

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Submit a suspicious transaction report to FINTRAC

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Facts?
Context?
Indicators?
Reasonable grounds to suspect?

You may need to ask more questions or request additional information.
For example,

In scenario 1, how will the client, who is a student, make the mortgage payments? What other documentation might you request?
In scenario 2, the client operates a massage therapy business in an area of town known for criminal activity. Therefore, would you check if there is any public information connecting the client or the business to criminal activity?
In scenario 3, why can’t the client provide pay stubs? Why is the client purchasing a condo that is 2 hours away? Who is the friend and why is the friend providing part of the down payment?

When you receive additional information for each scenario, you need to consider it along with the current information you have. The additional information may or may not help you reach the “reasonable grounds to suspect” threshold. The additional information may even prompt you to ask further questions or request more information.

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Scenarios- additional questions and information

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How will a student make these payments?
Other documents?

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Public information connecting the client or the business to criminal activity

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Why can’t the client provide pay stubs?
Why is the client purchasing a condo that is 2 hours away?
Who is the friend and why is the friend providing part of the down payment?

In reality, all scenarios will be unique, and therefore, it is important to use a holistic approach when reviewing the facts, context and indicators. This will help you to determine whether you have reached reasonable grounds to suspect that a transaction or attempted transaction is related to the commission or attempted commission of a money laundering or terrorist activity financing offence, or that there are reasonable grounds to suspect that transactions are being attempted or completed in order to evade sanctions.

If the “reasonable grounds to suspect” threshold is met, you must submit a Suspicious Transaction Report to FINTRAC.

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Holistic approach.

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Facts
Context
Indicators
Reasonable grounds to suspect
Submit a report

Now that we have covered when to submit a Suspicious Transaction Report”, let’s quickly go over how to submit this report to FINTRAC.

When you have a Suspicious Transaction Report, you must submit it electronically using FINTRAC’s Web Reporting system or FINTRAC’s API report submission.

FINTRAC’s Web reporting system is an on-line platform that allows you to manually enter and submit the report and is generally used when you have lower reporting volumes.

API report submission is generally used when you have large volumes of reports to submit.

You must register to use FWR or the API Portal and you can find more information on these systems and the registration process on FINTRAC’s website.

Let’s look at some additional information regarding suspicious transaction reports.

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How to submit a suspicious transaction report to FINTRAC

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FINTRAC Web Reporting System and API report submission

First, you should know that it is against the law to inform anyone, including the borrower, of the contents of a Suspicious Transaction Report, or that you have made or will make such a report, if informing them is done with the intent to prejudice a criminal investigation. This applies whether such an investigation has begun or not.

Therefore, it is important to not tip off your client about the fact that you are filing a Suspicious Transaction Report. This means that you can continue to ask for information that you would normally request, based on the compliance department policies and procedures of your company. However, you must not ask for information that you would not normally ask during a transaction, if you believe this would tip off the client.

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Suspicious transaction reports
Tipping off

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It is against the law to inform anyone of the contents of a Suspicious Transaction Report, or that you have made or will make such a report.

Do not tip off client about submitting a report
Do not ask for information that you would not normally ask during a transaction

There is no minimum or maximum transaction amount for a Suspicious Transaction Report. As long as you have determined that there are reasonable grounds to suspect that:

a transaction or attempted transaction is related to a money laundering or terrorist activity financing offence, or
transactions are being attempted or completed in order to evade sanctions.

Then, you must report these transactions to FINTRAC in a Suspicious Transaction Report.

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Suspicious transaction reports
No monetary threshold

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No minimum or maximum transaction amount for a Suspicious Transaction Report

Reasonable grounds to suspect
Submit report to FINTRAC

There are some common myths about suspicious transaction reports, let’s look at some of them and set the record straight.

Myth number 1:
If I think something might be suspicious, I cannot complete the deal.

This is false. You are not required to terminate a deal that raises your suspicion – you can continue with the deal or you can terminate it.

If you continue with the deal and the transaction is suspicious, you must submit a Suspicious Transaction Report to FINTRAC. You must also consider the impact that completing this transaction may have on your risk assessment, including the requirement to perform enhanced measures on high risk clients. Please refer to the guidance on FINTRAC’s website for more information on risk assessment and enhanced measures.

If you terminate the deal because the transaction is suspicious, you must still submit a Suspicious Transaction Report to FINTRAC.

As mentioned earlier, suspicious transactions can be completed transactions or attempted transactions.

Myth number 2:
If I send a Suspicious Transaction Report to FINTRAC, the client will know.

This is false. FINTRAC will not inform the client. FINTRAC may disclose the information you provided as part of a disclosure to authorized recipients of FINTRAC disclosures—for example, a law enforcement agency.

Also, in most cases, a disclosure to law enforcement does not just include the information provided by a single business. Most disclosures contain information from multiple businesses based on the different report types that they are required to submit to FINTRAC.

Myth number 3:
I only need to think about money laundering if a client gives me cash.

This is false. Money laundering is not limited to cash. Drafts, electronic money transfers and other negotiable instruments are also used to hide criminal proceeds.

Bottom line: Money laundering isn’t just about cash.

Myth number 4:
I just found out some new information, for example, my client is linked to criminal activity. However, I cannot submit suspicious transaction reports for transactions and deals conducted by this client in the past.

This is false. If you come across information about a client that connects them with criminal or illicit activities, you can still submit a Suspicious Transaction Report on a transaction or deal that was completed in the past. As soon as you become aware of this new information, you should assess transactions for the need to submit a Suspicious Transaction Report.

Myth number 5:
I believe there is a suspicious transaction, but I don’t need to submit a report to FINTRAC because another business involved in the mortgage process will be submitting a report to FINTRAC on this same transaction.

This is false. Once you have completed measures that enable you to establish that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering offence or terrorist activity financing offence, you must submit a Suspicious Transaction Report to FINTRAC as soon as practicable.

You must do this even if you think or believe that another reporting entity is submitting a report on the same transaction. This is not duplicate reporting as different reporting entities may have different facts, context and details on the same transaction. Every reporting entity must comply with their requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations.

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Suspicious transaction reports
Common myths

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If I think something might be suspicious, I cannot complete the deal.

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If I send a Suspicious Transaction Report to FINTRAC, the client will know.

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I only need to think about money laundering if a client gives me cash.

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I cannot send suspicious transaction reports for transactions and deals conducted in the past, even if I learn of new information

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Another business involved in the mortgage process will submit a Suspicious Transaction Report, so I do not have to submit a report on the same transaction to FINTRAC.

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Although this information session covered suspicious transaction reports in the mortgage sector–what they are and what you need to do–we recommend that you review the guidance on FINTRAC’s website.

The guidance on reporting suspicious transactions is comprehensive and provides more detailed information, including scenarios and field instructions.

When you submit suspicious transaction reports to FINTRAC, you are not just complying with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated regulations.

You are also helping to prevent, detect and deter criminals from using Canada’s financial systems to launder the proceeds of their crimes or to finance terrorist activities.

The information that you provide in the reports that you submit to FINTRAC helps form the basis of the financial intelligence that is disclosed to Canada’s law enforcement and national security agencies.
Suspicious transaction reports are important and the reports you submit make a difference.

For more information on suspicious transaction reports, visit FINTRAC’s website: fintrac-canafe.canada.ca

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