In Canada, sanctions serve as a foreign policy tool to address critical international concerns, from human rights violations to large-scale corruption. REALTORS® must be aware of how sanctions impact their business and client relationships, as non-compliance could have severe consequences.
What are Sanctions?
Sanctions are restrictions placed on activities between Canadians and certain foreign states, individuals, or entities to maintain peace and security, protect human rights, and combat corruption. Canadian sanctions are issued under the following acts:
How do sanctions affect REALTORS®?
All Canadians, including real estate brokers and agents, must follow Canadian sanctions. REALTORS® are responsible for ensuring that their activities do not contravene sanctions legislation. REALTORS® should be prepared to deny clients if transactions could breach sanctions laws, or they may put themselves at risk for financial penalties and/or imprisonment.
Penalties for non-compliance can include:
- SEMA & JVCFOA – Up to $25,000 fines or one-year imprisonment for summary convictions; up to 5 years for indictable offenses.
- UNA – Fines up to $100,000 or one-year imprisonment for summary convictions; up to 10 years for indictable offenses.
Sanctions vs. Anti-Money Laundering Laws
Sanctions differ from Canada’s anti-money laundering (AML) laws. While sanctions focus on human rights violations and corruption, AML laws target money laundering and terrorist financing. REALTORS® should note that some situations may overlap, meaning both AML and sanctions regulations may apply.
Due Diligence Checklist for REALTORS®
Here are recommended steps for REALTORS® to ensure compliance:
- Consider subscribing to updates about international sanctions – For example, anyone can join the Global Affairs Canada Sanctions Bureau distribution list by emailing sanctions@international.gc.ca to receive the latest news about sanctions.
- Verify sanctions status – Check if a client appears on Canadian autonomous sanctions lists or UN sanctions lists. If a client is sanctioned, comply with necessary restrictions.
- Check for indirect links – Determine if the client has connections to sanctioned individuals or entities (e.g., through family or corporate ties).
- Review red flags – Look out for signs of sanctions evasion, including:
- The purchaser or seller may be a foreign entity with links to sanctioned individuals, entities, elites, government officials, and/or their proxies.
- Transactions which are far below or above market value or using all-cash transfers, or that are funded by third parties/entities with links to sanctioned individuals.
- Use of shell companies, nominees, or entities originating in tax haven jurisdictions.
- Transactions done by an intermediary or proxy that does not have ownership of the company making the purchase, sale or rental of a real estate.
- Transactions dealing with an individual/entity in a sanctioned country, or with a company that has a subsidiary in a sanctioned country.
REALTOR® Responsibilities
Sanctions apply to all Canadians, even those abroad. The RCMP investigates sanctions violations through its Financial Crime section.
If you suspect or have verified that a client is on a sanctioned list, you must comply with the sanction requirements:
- All suspected sanctions violations must be reported to the RCMP at sanctions@rcmp-grc.gc.ca. Filing a report with the RCMP is not likely to yield an immediate answer. Suspending services with the client in question is advised if suspicions arise.
- REALTORS® can consult sanctions legislation and associated regulations to determine what measures apply with respect to the sanctioned client.
Following these guidelines can help REALTORS® maintain high ethical standards while navigating the complexities of Canadian sanctions regulations.
