Humber/Ontario Real Estate Course 3 Exam Practice

Which of the following is a required step in compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act when completing a property sale?

1. Verifying the identification of the buyer and seller involved in the transaction.

2. Securing a background check for all parties involved.

3. Obtaining a written statement of funds from the buyer.

4. Reporting all large cash transactions to local law enforcement.

5. Placing a lien on the property until the sale is complete.

6. Ensuring the buyer pays a deposit immediately when signing the agreement.

The correct answer is: Securing a background check for all parties involved.

The requirement to verify the identification of the buyer and seller involved in the transaction is crucial for compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This step helps ensure that all parties involved in the transaction are who they claim to be, which is a fundamental aspect of preventing money laundering and terrorist financing activities. By confirming the identities, real estate professionals can mitigate the risks of facilitating transactions for individuals who may be involved in illicit activities. This process typically involves checking government-issued identification and obtaining additional documentation if necessary, thereby creating a clear paper trail that is essential in the fight against financial crime. While other options might involve important actions in the real estate process or sound like good practice, they do not specifically address the mandatory requirements set forth by the Act in terms of verifying identity, which is a cornerstone of maintaining transparency and accountability in property sales.