The Canadian Mortgage Broker Magazine - Winter 2024

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niche p.24


Cross-country update from CMBA provincial associations p.10


Removing subject-to-financing clauses p.18


How to address new requirements p.42


AI in Canadian financial institutions p.36

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New proposed measures to disincentivize short-term rentals which are non-compliant with local jurisdiction





CMBA’s provincial association presidents aim to grow their ranks by delivering member programs and services that matter BY LISA GORDON


CMBA National's compelling value proposition


Work hard and your mortgage industry niche will naturally develop over time, say brokers BY


Not fully stressed – further announcements expected BY RAY BASI



The use of AI in Canadian financial institutions




Steps to address money laundering and terrorist financing risks and activities BY RAY BASI

CMB MAGAZINE CMBA-ACHC.CA WINTER 2024 I 5 VOLUME 9 ISSUE 1 WINTER 2024 departments columns Editorial Advertisers’ Index Off the Clock: Mortgage broker Daniel Cox wears many hats, all of them designed for community service BY LISA GORDON
Ease: Consider the potential impact of removing subject-to-financing clauses BY RAY BASI Industry profile: Deb White’s client-centric service model BY LISA GORDON 8 46 16 18 28
24 30

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Terry Kilakos (CMBA-Quebec)

Jim DeCoste (CMBA-Atlantic)

Deb White (CMBA-BC)

Taylor Lewis (CMBA-Ontario)


Carla Giles


Mortgage Brokers Association of Atlantic Canada

12 M - 7095 Chebucto Road, Halifax, NS B3L 0A1


Mortgage Brokers Association of British Columbia

2025 Willingdon Ave, Suite 900, Burnaby, BC, V5C 0J3


Independent Mortgage Brokers Association of Ontario

7 - 40 Winges Road, Woodbridge, ON L4L 6B2


L'Association des courtiers hypothecaires du Québec

5855 Taschereau #202, Brossard, QC J4Z 1A5

CANADIAN MORTGAGE BROKER magazine is produced by the Canadian Mortgage Brokers Association
Carla Giles
Ray Basi Farryn Cohn Carla Giles Lisa Gordon
IMAGES Adobe iStock VOLUME 9 ISSUE 1 WINTER 2024 PUBLICATIONS MAIL AGREEMENT 41297283 Please return undeliverable Canadian addresses to 900-2025 Willingdon Ave., Burnaby, BC V5C 0J3 Printed in Canada by Hemlock Printers Ltd. CANADIAN MORTGAGE BROKER © All rights reserved. The views expressed in CANADIAN MORTGAGE BROKER are those of the respective contributors and are not necessarily those of the publisher or staff.
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Challenges and strategies for mortgage brokers


The Canadian housing market has been abuzz with activity in recent months, showcasing notable increases in residential unit sales across major markets.

According to the British Columbia Real Estate Association (BCREA), January 2024 saw a 29.4 per cent surge in sales in British Columbia compared to the same month in the previous year, while Ontario experienced a 21.4 per cent rise as reported by the Ontario Real Estate Association (OREA). Nationwide, the upswing in home sales activity reached an unexpected 22 per cent compared to the same period last year.

“A sharp decline in fixed mortgage rates and expectations for future Bank of Canada rate cuts is driving sentiment in the market and bringing pent-up demand off the sidelines,” says BCREA’s Chief Economist Brendon Ogmundson, noting a clear uptrend in the real estate market in B.C.

This recent increase in home sales activity is a positive development for mortgage brokers across the country. However, it is important to recognize that market imbalances are still impacting Canadians, potentially limiting the overall volume of home sales transactions.

The demand for housing in Canada has been steadily rising, driven by factors such as population growth, shifting demographics and historically low interest rates. Nonetheless, the

housing sector continues to grapple with a persistent shortage of supply, reflecting decades of under-investment.

Despite various initiatives and policy adjustments aimed at stimulating housing supply and promoting innovative housing solutions, affordability challenges persist, especially for firsttime homebuyers and low-to-middle-income households. Efforts to incentivize densification and promote more affordable housing solutions such as laneway housing and micro-units are underway. But questions linger about the adequacy of these measures to address the diverse needs of Canadians, particularly in major urban centres in the short and medium term.

Moreover, the scarcity of housing options catering to middle-income families and multi-generational households further compounds the challenge. While single-family homes continue to dominate the market, there is a growing demand for alternative options such as townhouses, duplexes and condominiums – as well as mortgage products to support the increased interest for co-ownership.

As the dream of homeownership becomes elusive for many Canadians, there is a growing sentiment among politicians and policy-makers that Canadians should consider renting rather than owning a home. However, the rental market is not without its challenges. A recent report released by the Canada Mortgage and Housing Corporation (CMHC) indicates historic lows in rental vacancy rates nationwide, hitting

a 35-year low of 1.5 per cent. This scarcity of housing options further complicates the housing crisis and impacts many facets of the Canadian economy.

In this evolving landscape, mortgage brokers play an important role in assisting homebuyers as they navigate the intricate process of mortgage financing and helping mortgage holders facing renewal challenges by identifying viable solutions.

Successful mortgage brokers are adapting to better serve their clients. They are focusing on staying informed about new regulatory requirements; utilizing advanced technology to improve communication with clients, lenders and partners; and strengthening connections within their communities. By adopting these proactive measures, mortgage brokers are not only responding to industry shifts but also ensuring they are better equipped to meet the evolving needs of homebuyers.


To remain competitive, mortgage brokers are actively seeking educational and networking opportunities. This involves improving marketing skills, staying updated about new lending products as well as government programs to support affordability, and keeping abreast of evolving regulatory and compliance requirements.

This proactive approach ensures compliance with evolving regulations and equips brokers to


provide comprehensive support to clients navigating homeownership considerations or seeking assistance with mortgage renewals. As they actively engage in educational opportunities, brokers enhance their ability to guide clients through the complexities of the ever-changing housing landscape.


Establishing a robust referral network is indispensable for mortgage brokers seeking to expand their client base. For example, real estate agents, as pivotal players in the homebuying process, can serve as valuable partners in generating new clients.

Building a strong referral network necessitates proactive networking and relationship building. Participation in industry events, networking functions, and engagement with industry professionals both online and offline can aid mortgage brokers in establishing and nurturing these relationships. Clear and timely communication is key in maintaining strong referral partnerships, showing appreciation for their referrals and delivering excellent service to their clients, thus enhancing the overall client experience.


In the mortgage industry, embracing digital technology as well as leveraging industry data are crucial for future success. Companies investing in innovation by leveraging digital technologies are better positioned to compete for top talent in what is already a very competitive space. This allows for streamlined operations, improved security and compliance, and enhanced broker and client experiences. By maintaining a clear focus on core strengths, technology investments can be targeted effectively, boosting productivity and empowering brokers for success.

At the same time, strategic partnerships will play an increasingly crucial role in the broker channel and allow brokerages to access new capabilities, accelerate expansion and better allocate resources. By embracing these approaches, companies can stay ahead in an evolving market landscape.

ADVOCACY ROLE. Mortgage brokers have a unique opportunity to provide a nuanced perspective on the impact of housing policies in the communities they serve. Their unique vantage point enables them to identify the intricacies of local housing markets and offer vital perspectives to support a more nuanced approach to housing affordability issues. Their invaluable insights, channelled through mortgage broker associations, can be instrumental in promoting policies that not only support and enhance professionalism within the mortgage industry but also address the obstacles to homeownership, contributing to a more balanced housing market.

In conclusion, the recent surge in home sales activity reflects the dynam ic nature of the real estate market. While the increased demand is positive for mortgage brokers, there are underlying market imbalances that impact the overall volume of transactions. Affordability challenges persist, as the housing sector grapples with a persistent shortage of supply. Initiatives to stimulate housing supply and promote affordable solutions are underway, but questions linger about their adequacy.

As the housing landscape evolves, mortgage brokers play a crucial role by adapting to industry shifts, focusing on education and new products, building strong referral networks, embracing innovation and supporting advocacy efforts. By actively engaging with these strategies, mortgage brokers are not only responding to current challenges but also positioning themselves to meet the evolving needs of homebuyers in a dynamic and complex housing market.



As they reflect on 2023 and focus on the year that lies ahead,

CMBA-British Columbia ,

CMBA-Ontario , CMBA-Quebec , and CMBA-Atlantic aim to grow their ranks by delivering member programs and services that matter.

cross-country update

From soaring interest rates to plunging affordability, it was a challenge helping Canadians get into homes in 2023.

While home ownership remained a goal for many, it was a year to pause, take stock and adjust expectations. Mortgage brokers across the country found themselves crafting innovative and sometimes shortterm solutions to help clients realize the dream of home ownership – or, sometimes, to help them stay in their homes in the face of rising mortgage payments and inflation-fueled household debt.

As 2024 dawned, there was more optimism in the air. Overall, mortgage brokers believe we will soon see much-needed interest rate cuts and that, by mid-year, the cyclical mortgage market will begin to accelerate once more. At the same time, CMBA and its provincial associations are working hard to provide value for membership, including educational opportunities, networking events and effective government relations.

In early January, Canadian Mortgage Broker connected with the presidents of CMBA’s four regional associations – Atlantic, Quebec, Ontario and British Columbia – to find out how they fared last year and what’s in the cards for 2024.


In 2023, CMBA-Atlantic hosted successful professional development and networking events for mortgage brokers and industry partners in Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

Association president Jim DeCoste highlighted several industry webinars that forged connections between the region’s mortgage brokers and the industry partners that support them. The live webcasts included featured guests who shared information on various mortgage products and services, followed by real-time Q&As with brokers.

September was also a big month for CMBA-Atlantic, said DeCoste. On September 18, the association hosted a trade show and lender networking reception. The following day, mortgage professionals hit the links for the inaugural Donald MacMillan Memorial Golf

Tournament, in memory of CMBA-Atlantic’s past president.

“It was very well attended and received by the industry, and we’re looking forward to building off that in 2024,” said DeCoste.

CMBA-Atlantic marked several other accomplishments in 2023, including adding three new regionally-based directors to its board, and ongoing relationship-building with provincial governments and regulators.

“Last spring, the association partnered with PROLINK to offer our members Guaranteed Acceptance Critical Illness Insurance,” he said. “We plan to once again partner with PROLINK in March for another special offer, this one for Guaranteed Acceptance Term Life Insurance, delivered by Industrial Alliance. Our members can also get Errors & Omissions insurance through PROLINK.”

Jim DeCoste

cross-country update

As he looks ahead to 2024, DeCoste listed the priorities for CMBA-Atlantic:

n Growing the membership through education, advocacy and awareness of the value of belonging to the association;

n Increasing association exposure through in-person visits, local activities run by CMBA-Atlantic’s provincial directors, and a variety of outreach initiatives to connect with Atlantic brokers;

n Hosting a symposium in February, focusing on the market challenges Atlantic brokers may face in the coming year; the impact of AI on the mortgage industry; how to manage the volume of renewals expected in 2024-2025; and a review of the anticipated increase in new construction to meet inventory shortages;

n Hosting the second annual Donald MacMillan Memorial Golf Tournament; and,

n Continuing to build relations with provincial regulators and promoting programs offered through different provincial government departments, including Down Payment Assistance, First Time Home Buyers and Rent-toOwn, to name a few.

When asked how CMBA-Atlantic will measure its success over the coming year, DeCoste said membership numbers, event attendance, government interactions and industry partner participation will tell the tale.

For this year and beyond, he predicted the Atlantic provinces will see an increase in mortgage applications from those who are new to Canada; an uptick in renewal and transfer activity as clients shop around for the best terms; and continuing concern about housing inventory in the face of sustained demand.


Even though Sylvain Poirier is preparing to hand the torch to his successor sometime this year, the current president of CMBA-Quebec is laser-focused on increasing membership by delivering concrete value.

“We have a new transactional website in development that will allow people to renew their memberships online; the system will provide them with a billing and membership number,” he explained. “With that number, they will have access to member privileges through our partners, including special rates on liability insurance, training sessions, phone plans and office supplies. We are developing partnerships with other organizations to provide additional rebates.”

Poirier said 2023 was a tough year for mortgage brokers in Quebec, as it was across the country.

“Ballpark, I’d say business decreased between 40 to 50 per cent from the peak,” he told Canadian Mortgage Broker. “The lenders are experiencing the same figures. When it went down like that, many brokers left the business. But I can say, being in this business for 25 years, that it’s a cycle. I’ve gone through four major decreases in the market, but as soon as the Bank of Canada decreases its rates once or twice, you will see the markets going up.”

Looking ahead at 2024, Poirier said he will assist with finding the next association president and helping them acclimate to the position.

“I hope that person will take the association to the next level,” he shared. “They will bring their own unique experience to the job.”

When the new CMBA-Quebec website is finalized, he also hopes to host some online events focused on broker education, seminars and industry communications.

Mainly, Poirier said the goal will be to increase association membership. The way to do that, he added, is to be the real voice of the broker.

“On the board, we’re focusing on how we can represent all the brokers in this province – not just on what membership dues we collect. You have to give first. We must be the voice of every broker, even those who are not members, to build the value before collecting the money.”

Shifting gears, Poirier said artificial intelligence (AI) and its application in the mortgage industry will be a critical component of how modern brokers do business.

“All brokers must work with AI – and if they don’t, they won’t be in the business over the next three years,” he predicted. “You will see some very productive brokers decreasing their business, while new brokers who are good with technology and social media will skyrocket. You will see that in 2024 and 2025.”

Poirier said he uses AI applications for automated client communications, entering their information into his CRM system at the very beginning of the relationship.

“They receive a welcome message immediately to confirm their information and it begins to develop the relationship. Every step of their mortgage process will be sent to them; you keep them alive, keep them connected. Twenty years ago, brokers had to go where the clients were. Today, the clients are in front of the computer. If you’re not there, unfortunately you won’t be successful.”

Similar to his mortgage industry peers across Canada, Poirier believes the market will take a turn for the better by mid-2024.

“When it rains, it never rains for all time,” he concluded. “The past two or three years were uncomfortable for the business. But as soon as the consumer feels a bit less pressure, you’ll see the rainy days in the past.”

Sylvain Poirier


CMBA-Ontario had another busy year, full of educational and entertaining events that brought the provincial mortgage industry together.

Association president Taylor Lewis said the big entries on the 2023 calendar included CMBA-Ontario’s annual conference, gala and trade show at the end of March, as well as the Summerfest golf tournament in Niagara Falls.

In addition, the association rolled out a series of educational symposiums and trade shows across the province, including in Ottawa, Southwestern Ontario and the Greater Toronto Area (GTA). Golfers took to the links at tournaments in Ottawa and Kitchener, enjoying the chance to practice their games while networking with industry peers.

Lewis said a highlight of the year was a charity casino night that raised money for Toronto’s SickKids Hospital. “We raised enough over the past three years to be awarded a plaque at SickKids in recognition of CMBA-Ontario and our donations,” he said.

While programs are often held in the GTA, Lewis said CMBA-Ontario is committed to holding events across the province.

“As an association, our responsibility is to include our members across the province, and not to isolate them, and that is a responsibility we treat with the utmost importance,” he said.

In total, CMBA-Ontario represents about 1,000 members who fall into these categories: licensed members, non-licensed members, licensed lenders, student members and partner members.

Lewis said all industry members faced a challenging year in 2023.

“Last year called on the expertise, creativity and intelligence of mortgage brokers more than the preceding years,” he explained. “Since the pandemic, we have seen mortgage rates fluctuate, employment rates fluctuate, and housing prices fluctuate. This has resulted in increased pressure on mortgage brokers to come up with creative and brilliant solutions for borrowers, no matter the circumstances.”

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That’s why CMBA-Ontario chose to launch four new educational offerings in 2023, to equip brokers and agents with the tools they need to serve their customers.

As 2024 unfolds, Lewis said CMBAOntario’s priority will be to give the broker channel what it needs to navigate a perpetually evolving market. This includes networking opportunities and educational opportunities for all members of the mortgage industry –whether they are brand new or highly experienced.

“Ultimately, our team wants to be of value to mortgage professionals and their careers,” said Lewis. “Their successes are CMBAOntario’s successes, and those of the industry as a whole. We will continue to take careful measure of how members and other attendees respond to our courses and events.”

As for the 2024 market, he added that if interest rates do begin to drop, as predicted, it should stimulate the housing market to surpass 2023 numbers.

“With that being said, brokers will continue to be in higher demand than previous years,” concluded Lewis. “It will take experts with access to a variety of lenders to put borrowers in homes, and in mortgages that fit their unique situations.

“In 2024, I expect the mortgage industry to continue to do what it does best, which is find solutions for Canadians to put roofs over their heads. One thing that the mortgage industry has consistently proven, year after year, is that we are adaptable. We will always find new ways to solve problems that Canadians face every day.”


CMBA-BC is still three months away from hosting its annual conference from April 15-16, 2024, but as of early January, sponsorships were nearly sold out and there were only a couple of booths left for the trade show.

“We’re on a good roll right now,” commented Marci Deane, association president. She said CMBA-BC’s 1,200 members – who represent the province’s managing brokers and sub-brokers, plus associated product and service providers –have been supportive of industry events.

“In 2023, we held our first big in-person event since 2020, our annual conference and

trade show. We were excited to host 500 people at the Park Hotel in Vancouver. We also updated our association by-laws at our AGM in May.”

Deane said she participated in the CMBA-BC Roadshow, with industry events held in Langley, Kelowna and on Vancouver Island.

“It was a chance for me to go around and meet brokers from different parts of the province,” she said. “Kelowna and Victoria were in November; they were both really well attended by brokers and lender partners. We’ve also had an ongoing series of great webinars and educational content. Plus, we have our two main courses for newer brokers and managing brokers. Those are always fully sold out and well attended.”

From an association perspective, Deane said the goal is always to get the word out to increase membership.

“It’s not a requirement under our licensing to be a member of our professional association – it’s voluntary,” she explained. “So, our challenge is to get the word out that we add value, that we’re important. For me, my message across the province is that there is power in numbers. We meet with BCFSA (the B.C. Financial Services Authority, the provincial regulator) and government regularly, but we can have a bigger voice if we’re speaking for all mortgage brokers in B.C.”

Deane estimated there are about 5,000 mortgage brokers in B.C., so there is lots of opportunity to expand the association – “and that’s our biggest goal for 2024. We have a big membership of established brokers, but it’s getting the new brokers to understand the importance of joining their professional association.”

The CMBA-BC board works to keep member education offerings relevant. In 2023, events included frequent economic updates from top industry economists, a fireside chat with one of the top conveyance lawyers in B.C., and a session on AI in the mortgage industry, which included tips and tricks to maximize time and productivity.

Looking ahead to 2024, CMBA-BC will continue its conversations with BCFSA, which will be rolling out the new Mortgage Services Act sometime during the year. Deane said the law has been in the works for a number of years and there will be a great deal of consultation happening as it is rolled out.

Webinars and road shows will also continue this year, she revealed.

“We’re working hard on all kinds of initiatives to make sure there’s a lot of value in being part of CMBA-BC. Our success will be measured in membership numbers, attendance and also just the buzz in the industry. I feel like we really have a positive vibe and talk around CMBA-BC right now, in general.”

Reflecting on the next few months, Deane thinks the first quarter of 2024 will continue to present challenges for the mortgage industry. However, by mid-year things will start to improve, and then “things will be great” heading into 2025.

Deane concluded by tipping her hat to Carla Giles, CMBA-BC CEO and CMBA National Executive Director, who joined the association at the beginning of 2022 and has accomplished much in just two years.

“We have a great, hardworking board and we’re getting a lot done.”

Across the country, CMBA’s provincial associations are heading into the new year with renewed optimism and a commitment to delivering solid member value. From educational offerings to valuable networking opportunities in-person and online, association membership delivers proven advantages in any kind of market.

For more information, visit the CMBA National website at

cross-country update
Marci Deane


CMBA National’s compelling value proposition

The Canadian Mortgage Brokers Association (CMBA National) stands as a unifying force for provincial mortgage broker associations across Canada. Through collaboration and resource-sharing, CMBA National empowers these associations to focus on delivering tailored services to their members while advocating for industry-wide initiatives on a national scale.


Established in 2014, CMBA National was created to fortify the network of provincial mortgage broker associations (CMBA-BC, CMBA-ON, CMBA-Quebec, and CMBA-Atlantic), allowing them to concentrate on providing region-specific services. By offering a collaborative platform, CMBA National facilitates the exchange of resources, branding initiatives, and industry insights essential for growth. Through coordinated efforts, members identify trends and develop collective solutions to address common challenges in the industry.


CMBA National plays a pivotal role in shaping Canada's mortgage broker industry:

n Advocacy: Representing mortgage brokers' interests at the federal level, CMBA National champions legislative agendas that support the vibrancy of the sector nationwide.

n Umbrella Support: Providing resources, advertising materials, and brand awareness initiatives, CMBA National supports provincial associations in delivering exceptional services to their members.

n Professionalism and Ethics: CMBA National upholds member professionalism and ethics by establishing national standards such as the Mortgage Broker Regulators’ Council of Canada's (MBRCC) Code of Conduct, ensuring quality and integrity.

Provincial associations also have significant responsibilities within their jurisdictions:

n Representation and Advocacy: Advocating for members' interests at the provincial level, these associations engage with government bodies, licensing bodies, and regulators on local issues. They also work with industry partners to elevate the profile and market position of mortgage brokers at the provincial level.

n Education and Networking: Delivering licensing courses and continuing education programs to members, provincial associations ensure they stay informed about industry developments. They also provide networking opportunities through webinars, networking events, trade shows, and conferences, fostering a vibrant community of mortgage brokers.


CMBA National is governed by a Board of Directors nominated by the provincial associations' respective Boards and supported by Executive Director Carla Giles. Current Directors include Terry Kilakos

Jim DeCoste (Vice President and Secretary), and Deb White (Treasurer). A fourth director position, to be filled soon by a director from CMBA-ON, completes the leadership team.

CMBA National serves as a cornerstone of unity and collaboration within Canada's mortgage broker industry. By empowering provincial associations and their members, CMBA National fosters a robust, ethical, and consumer-focused mortgage ecosystem nationwide.

To learn more, visit

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East Coast mortgage broker Daniel Cox wears many hats, all of them designed for community service



hen Daniel Cox finished a 10-year deployment with the Canadian Navy, he immediately navigated toward an industry where he could still help others. In 2010, he embarked on what would be a six-year transition from the military into full-time financial services, specializing in middle-income families. In 2019, Cox added mortgage brokering to his offerings, focusing on current homeowners and first-time homebuyers.

Today, Cox is based in Lower Sackville, N.S., where he enjoys dual roles as team leader, mortgage broker and brand ambassador with Mortgage Alliance, as well as branch manager for PFSL Investments Canada Ltd., a financial advising firm.

“I joined the military to protect my country and serve the people within it,” he told Canadian Mortgage Broker during a recent interview. “I do have that servant’s heart, so I am the guy who runs toward fire rather than away from it.”

Cox stepped into the breach for local communities during the pandemic, when he and his wife, Jennifer, purchased three Premier Sports Leagues franchises in Halifax, Dartmouth and Sackville. The organization introduces kids to a variety of fun recreational and competitive sports, with floorball – a type of co-ed floor hockey with playing levels from under seven to adult – being the anchor sport.

The Coxes have five children of their own, aged three to 20, and prioritize family ties – so much so that Jennifer also works at Cox’s office as an administrator and his mother lives on his property.

“We bought a large property in order to host events for family, business associates and clients,” he said. “I even built a home for my parents with my own two hands on our property.”

The importance of organized sports and the camaraderie it builds is not lost on the Coxes.

This is our way to give back to kids in the community who may be a little less fortunate and maybe couldn’t afford to play a sport otherwise.”

“We have a huge passion for the community and, in particular, helping all children to feel they are part of the group,” said Cox.

If a family cannot afford to have their child participate, he said his Mortgage Alliance office sponsorship helps to cover the costs.

“This is our way to give back to kids in the community who may be a little less fortunate and maybe couldn’t afford to play a sport otherwise,” he explained. “We do this so that kids can wake up Christmas morning with a smile on their face and possibly even a [floorball] stick in their hand.”

While his wife is owner/administrator for the sports franchises, Cox himself looks after operational roles, including coaching, refereeing, managing equipment and acting as convenor.

He’s happy to donate his time to the three franchises, where the kids refer to him as “Coach Dan.” At least once a year, Cox and his floorball travel team head to Ontario for tournaments in Cambridge and Guelph.

“Giving a child even one hour a week means that child gets positive, encouraging words poured into them, with a pat on the back and a can-do attitude to let them know they have what it takes,” he said. “I’m impact-driven, not money motivated, and that helps to fulfill my drive to impact families.”

brokers off-the-clock
Right: The Cox family all sporting Premier Floorball kit. Daniel is holding daughter Isabella while Jennifer has her hands on the shoulders of Emerson and Grayson for this family photo.

“Coach Dan” is also advocating to build a new, publicly owned multiuse sports and community centre in Sackville. He is currently working with local politicians and business leaders to see the idea to fruition, explaining that the facility would include an NHLsized ice rink and a gym that could be used for many sports, including a regulation-size floorball surface.

Cox believes a personal approach works best, whether for building sports teams, businesses or relationships.

He often chooses a ‘kneecap-to-kneecap’ service model when meeting with his clients – offering in-person or remote service, often after-hours, for those who are not available during the day.

Cox’s Mortgage Alliance office was busy in 2023, growing from three brokers in January to 32 just a year later. He expects to expand into Newfoundland as early as next year, adding to existing offices in Nova Scotia and Prince Edward Island, and one that is opening in New Brunswick. By the end of 2028, he is projecting the brokerage will have 100 licensed mortgage brokers – responding to a massive demand for their services in the eastern provinces.

Cox’s secret to success? He’s not afraid to fail.

“As long as you do everything legally, morally and ethically, don’t be afraid to fail,” he concluded. “If you keep doing the right things long enough, you will succeed. If anything, failing is the best teacher in life.”

This interview with Daniel Cox continues our series Brokers off the Clock. In every issue, we ask a mortgage broker to tell us what they like to do when they’re not behind a desk. Be it working with animals, travelling to exotic places or creating an awardworthy garden, we want to know how you unwind. Would you like to be profiled in a future edition – or suggest a fellow mortgage broker? Contact


The need for an educated, careful and thought-out practice





Apurchaser often enters into contracts to purchase real estate which contain a clause that their obligation to complete the purchase is binding only if they secure the mortgage financing they need. Many seek the assistance of a mortgage broker to secure this financing. On being satisfied that the financing has been arranged the purchaser removes the financing condition and the contract becomes binding on both the purchaser and seller.

What if the financing appears to have been arranged and the purchaser removes the financing condition only to have the financing later fall through? Can the purchaser sue the would-be lender for breaching its agreement to lend? If the mortgage broker advised the buyer that the financing was in place, can they sue the broker for the loss they suffer?

Consider Whittome v. Bains, 2023 BCCRT 974 when evaluating the risk involved. The case is from British Columbia’s Civil Resolution Tribunal (CRT). The CRT has jurisdiction over small claims brought under section 118 of the Civil Resolution Tribunal Act (CRTA). Section 2 of the CRTA states that the CRT’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly. However, the principles set out in the case are applicable far more generally.


The purchasers arranged to purchase real estate subject to being able to arrange the financing needed to complete the purchase. Their real estate agent referred them to a financing consultant who referred them to a specific mortgage broker. The broker arranged a financing commitment letter. The purchasers claimed that on the strength of their financing consultant and mortgage broker each having told them the financing had been secured, they removed the subject-to-financing condition in their contract and thus made the contract binding.

However, days before the purchase was scheduled to complete, the lender advised they would not be proceeding with the mortgage. This was because it had been discovered the security property was a mobile home and not, as it had understood, real estate. It did not lend on the security of mobile homes.

The purchasers then paid $5,000 to the sellers to obtain an extension and, on their own, arranged the needed mortgage from another lender.


Who is to incur the $5,000 cost for the extension? Was the loss the purchasers’ own fault and therefore not recoverable from others? Was the mortgage broker negligent and responsible for having advised the purchaser that the financing was secure when it was not? Was the financial consultant negligent and responsible for having advised them that the financing was secure when it was not? Did the lender breach the terms of the commitment letter by failing to complete the transaction?


The purchasers of course did not blame themselves, otherwise, a court case would not have ensued. They claimed they relied on the advice of the financial consultant (who they said they understood to also be a mortgage broker) and on the advice of the mortgage broker in removing the subject-to-financing clause.

The mortgage broker argued he had completed all necessary steps to secure the financing and placed the blame on the lender for withdrawing financing

legal ease

upon discovering the property had a mobile home.

For the hearing, the mortgage broker provided the commitment letter received from the lender, which was subject only to an appraisal confirming the property's worth. The purchasers provided a letter from their realtor stating that the MLS listing for the property showed the building on the property to be a mobile home. The copy of the MLS listing supported the realtor’s statement. The realtor’s view was that the MLS listing had not been read carefully. The mortgage broker claimed, as he had provided all required information and documents to the lender, it was the lender's own error in not noting that the property was a mobile home that had caused the withdrawal of financing. The purchasers contended that all of that aside, the mortgage broker failed to consider crucial factors in securing a mortgage for a property with a mobile home. In effect, the financing was not secure when the mortgage broker told them the subject-to-financing clause could be removed.

The financial advisor argued that he simply made a referral to the mortgage broker and was not otherwise involved in the transaction. Also, he agreed with the broker’s position.

The lender did not have to take a position as no one brought it into the lawsuit. The purchasers did not sue the lender and neither the mortgage broker nor the financial advisor brought it in as a third party. (A third party is not an original party to the lawsuit but is brought into the case by a defendant who seeks to shift some or all of the liability onto that third party. The claim is generally in the form of ‘if I am to blame for the plaintiff’s loss it is because of the conduct of the third party and the third party should be made to pay all or some of the amount.’)


The financial advisor was not negligent as his relationship with the purchasers was only that he referred them to the

mortgage broker, he was otherwise not involved in the transaction. The claim against him was dismissed.

The mortgage broker owed a duty of care to the purchasers because his role as their mortgage broker was sufficiently close to know that carelessness on the mortgage broker’s part could result in harm to the purchasers. The standard of care for a mortgage broker does not require perfection but the exercise of reasonable care. The mortgage broker should have known there were additional considerations when securing a mortgage where the property has a mobile home. The approval letter did not address the mobile home issue and the mortgage broker breached the required standard of care by failing to make further inquiries with the lender about how to secure a mortgage on a property with a mobile home. That failure led to the purchasers suffering damages the mortgage broker could have foreseen. The mortgage broker was ordered to pay the purchasers the $5,000 extension fee, plus prejudgment interest of $253.23, and hearing fees of $175.

The mortgage broker was free to pursue the lender for the amount it was ordered to pay the purchasers, but no order was made in this decision regarding that matter as the lender had not been brought into the action.


A mortgage broker takes some risk when advising a client as to whether a subject-to-financing clause should be removed from a purchase agreement. Whether a lender can back out of a commitment letter depends on the wording of the specific commitment letter. Some contain specific language as to when a lender can back out of the commitment, such as stating that if the borrower’s financial circumstance significantly changes between the date of the commitment letter and the date of funding the lender can decline to fund the transaction. Some even seemingly binding commitment letters leave wriggle room for the lender to argue they can back out of the commitment. This puts a mortgage broker in a difficult

How a broker navigates a specific circumstance involves a careful assessment of risks in the particular transaction. The mortgage broker might want to craft how the advice to the client is to be provided, such as starting with “I cannot foretell the future but, in most cases, …”

position when a client seeks advice as to whether the subject-to-financing clause in their purchase agreement can be removed.

If the mortgage broker does not provide an unequivocal yes, the client may find another broker or may not remove the condition and cause the purchase agreement to lapse. If the mortgage broker provides an unequivocal yes, the broker may take on liability if the transaction does not close and the client suffers losses. How a broker navigates a specific circumstance involves a careful assessment of risks in the particular transaction. The mortgage broker might want to craft how the advice to the client is to be provided, such as starting with “I cannot foretell the future but, in most cases, …” or "I cannot make the decision for you but here are things for you to consider.”

The above case does not include a discussion of the bigger risk to the mortgage broker. What if a mortgage broker advises the client that the subject-to-financing clause can be removed, the lender later fails to fund, and the seller does not extend the date (for or without a fee) and instead sues the purchaser for noncompletion. The purchaser could then be responsible to the seller for losses suffered by the seller and might look to the mortgage broker for recovery. The dollars involved could be a lot more than the amounts involved in this case.

If a mortgage broker is sued for having advised the client that the subject-to-financing clause should be removed, the mortgage broker should consider whether the lender improperly caused them to provide that advice and could be responsible.

And the final takeaway to be provided – yes, all businesses involve some risk but educated, careful, thought-out practice is a preferred option.

This article is not intended as legal advice. You are advised to obtain legal advice in specific instances.

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Work hard and your mortgage industry niche will naturally develop over time, say brokers

Jamie Ushko prefers to work with clients who don’t fit into a banker’s box.

She loves the challenge of placing an alternative mortgage for a self-employed entrepreneur, someone who has put their heart and soul into their business –just like Ushko herself.

“They work hard and they go to the bank and they are told no,” said the Kamloops, B.C.-based mortgage broker. “I feel like they are penalized for taking a less traditional approach to earning. I love being a warrior for those people.”

Ushko knows what it’s like to invest countless hours into your own business. She joined Mortgage Architects in 2021, making the jump from a sciencebased career as a researcher. At first glance, the two jobs are worlds apart. However, Ushko said there are many similarities.

“To be a good broker, you have to be resourceful and use the tools at your disposal to come up with solutions, like in the lab. Understanding the policies and where a file will best fit is important, and it’s important to be detail-oriented and methodical so every client has the same awesome experience.”

When she first became a mortgage broker, Ushko – like everyone else – took every file that came her way. She started with referrals from family and friends, and then began to develop

client referrals and then Realtor partnerships. In her first six months, she had a mixed bag of 15 files, including a reverse mortgage, four alt files, a private file and an assortment of more straightforward deals.

“As a broker, you have to be open and stay well-rounded in your skills,” she told Canadian Mortgage Broker. “You never know what will come at you. You have to be willing and able to do all of it.”

But even as she was doing all of it, Ushko realized that she really enjoyed working with self-employed homebuyers. Before she knew it, she had developed a niche and a reputation for getting difficult deals done.

“I’m known for picking up my phone,” she explained. “Most people are looking for someone who always answers and communicates well with clients and Realtors. Since I was picking up the phone, I was getting the calls on the emergency files that were failing at the bank or branch. You do that a number of times and Realtors and clients never forget you. I would say I am known for being reliable and getting things done.”

Ushko’s remote business model doesn’t prevent her from adding a personal touch to her deals. She uses Zoom, phone, email and text to communicate with her clients, adding customized videos to explain important concepts.

“I communicate complex commitment packages on BombBomb (a platform that embeds custom video into email messages). The video I send is personalized for the client. They can watch it on repeat and I find that people do replay it. I have never sent a mortgage commitment to anyone without an instructional video.”

Ushko, who said her clients tend to be between 30 and 60 years of age, adds them to her social media accounts after their deal funds. She uses Instagram and Facebook and a bit of TikTok, adding that it’s really a way for people to get to know her and stay in touch.

“I try to do a mix of educational and personal posts to keep it interesting. If you think about the problems your niche market has and try to answer them, Realtors will share your post if it’s useful.”

niche markets
You can do fancy ads, but if you’re not picking up the phone, you’re done. If I can’t get to my phone, my voicemail tells people I will call them back within an hour – and I do.”

So far, Ushko’s business has been growing quickly and organically via word of mouth and referrals.

“It hinges on personal relationships. You can do Realtor pitches, but if they don’t like you, they’ll forget about you. You have to build that loyalty. Follow through, be professional and consistent.

“Communication is the No. 1 thing,” she continued. “You can do fancy ads, but if you’re not picking up the phone, you’re done. If I can’t get to my phone, my voicemail tells people I will call them back within an hour – and I do.”

For brokers who are thinking of “niching,” Ushko said there’s no rush. She recommends they build their skills doing a variety of files to identify the market where they excel.

“Who is coming to you most, who are you helping? Find that out and then amp up those skills,” she advised.

Ushko is also a believer in lifelong learning. She often taps into the collective expertise of her broker team, let by Tara Borle at Mortgage Architects.

“There are so many experienced agents on our team. I can access expertise from all of them to get things done. I also take courses and talk with other brokers. Don’t be afraid to run a file by one of your contacts to see how they would do it.”

She also said brokers should not be afraid to consult the business development managers (BDMs) working for their lender partners.

On the positive side of the ledger, niching allows brokers to gain confidence in a particular skill set, developing solid relationships along the way with Realtors, BDMs and underwriters.

However, specializing in one area might mean that you forget how to handle other types of mortgage deals.

“We need to be versatile in our skills, so stay well-rounded,” said Ushko.

While she uses artificial intelligence (AI) every day for rewriting emails and scheduling social media posts, she’s not worried about a computer taking her job.

“As long as we’re niching on things that are more complex, it will be harder for AI to get in there. And, I think you never stop developing your niche. Keep an open mind, never think you’ve got it figured out. Keep plugging away.”


Three years ago, Jarrett White was working as a Red Seal automotive painter in Langley, B.C. When Covid-19 hit and there were fewer cars on the road, his work dried up.

“At that point, I was 22,” he recalled. “My friends were just finishing school and going into their careers. I had a Red Seal ticket, but it didn’t transfer to anything else. So I decided to sign up to be a Realtor.”

“I have tried everything as far as marketing – paid ads on Google, Facebook, SEO. SEO is expensive because you’re constantly trying to update it. The most cost effective way is referrals, by cultivating relationships with Realtors. The next source is your inner circle, so stay top of mind with them through social media.”

When he went online to register at UBC’s Sauder School of Business, he noticed the mortgage brokering course alongside the real estate program.

“Instead of competing with everyone I knew in real estate, I decided to partner with them,” said White. “We (brokers) have much more flexibility with our schedule and the volume is higher than a Realtor can bring in. Brokers can intake 20 to 30 files a month and still have time to do other things with their life.”

Today, White runs Whiteridge Mortgage in Langley, part of the Valley Financial Specialists brokerage. As he reflected on the last two-plus years in the mortgage industry, he admitted the first months were rough.

“Luckily, I was still living with my parents and had money saved up from working in the trades,” said White, who recently purchased his first home. “I started out by marketing and networking with Realtors, and it took three to four months before I had a dollar in my pocket.”

Like Ushko, White accepted every file he could get in the beginning. Over time, as he worked to get his name out through various social media channels, he realized that most of his clients were young first-time homebuyers and new permanent residents.

“If you were to ask most brokers and Realtors that know me, I have a pretty big presence within the industry on social media. Younger buyers identify with me,” he explained. “For me, it’s not necessarily that I chose to do those files, it just developed that way. I relate to them really well, think of them as friends rather than clients.”

White said a lot of his business now comes from repeats and referrals. He has a knack for working with young buyers and their parents, who are often gifting part of the down payment: “I have a really good process for talking with clients’ parents. Once they trust you, they refer you to every person they know.”

Along those same lines, he said that once a broker has handled enough first-time homebuyer files, including the really tricky ones, they understand what can be done to make it work.

When he’s communicating with clients, White said the

niche markets

first contact is usually by phone. After that, he connects with them by text and email, too. He also embeds customized BombBomb video into his emails when he needs to explain complicated documents or processes.

“When it comes to signing packages where you’re going through important details, you’d think people would want to talk – but if I’m thorough enough (in the video), they can do it on their own time,” he said. “If they need to hear something again, they can replay it and review.”

Every day, White spends one and a half to two hours on Instagram and TikTok, where his account name is “thatguythatdoesmortgages.”

“I’m messaging and talking with as many people as possible, working my way in, prospecting through social media to earn trust.”

He posts at least once a day to his 4,000 followers, about half of whom are Realtors. Most of his videos are educational and contain valuable information for young

people trying to become homeowners. Topics include tips for boosting their credit rating or an explanation of the co-signing process.

“I have tried everything as far as marketing – paid ads on Google, Facebook, SEO,” recounted White. “SEO is expensive because you’re constantly trying to update it. The most cost effective way is referrals, by cultivating relationships with Realtors. The next source is your inner circle, so stay top of mind with them through social media.”

For every 20 first-time buyers who reach out to White, he said about four or five are in a position to get a mortgage. Of those, it’s mainly because there are dual incomes and a parent with little to no debt who is willing to co-sign.

White said a mortgage broker’s niche will eventually develop over time, and there’s no point rushing it.

“You’ll get these one-off deals that are really tough, but now you know you can help them in that situation,” he said. “I had people in my brokerage telling me I take on the files that seem impossible and take a lot of time. That is how your niche develops. People refer other people who are similar to them.”

White believes niching is a good way to reduce competition.

“If you’re someone that does commercial mortgages, for example, you have much less competition from other brokers. First-time buyers is still a bit broad, but if you’re that person that does construction mortgages, you could do so well if you were getting a large chunk of that market.”

Most importantly, White said new brokers need to work hard and give it time.

“At month four, I was getting pretty discouraged. I was trying as hard as I could and nothing was happening. I wasn’t doing anything wrong; I just didn’t give it enough time. Now, my business has more than doubled each year and is continuing on that trend.

“If you’re doing a good job, the business will come. Give it time.”



Mortgage industry veteran Deb White founded her successful business on three pillars: establishing relationships, personalized attention and tailored solutions. It’s a recipe that has kept her clients coming back to White House Mortgages for nearly 20 years.

It’s game day. Deb White, owner and mortgage expert at Dominion Lending Centres – White House Mortgages, sits in her office on a Monday afternoon in December sporting her Seattle Seahawks jersey.

This is not an unusual practice for the Vernon, British Columbia-based entrepreneur. Not only is she a big Seahawks fan, but she also believes wholeheartedly in the value of a positive, more relaxed work atmosphere.

She says that her business beliefs align with her personal convictions, summing it up this way: “If you wouldn’t do it or act that way in front of your mother, don’t do it.”

Mortgage brokers play a pivotal role helping individuals navigate the complex journey to homeownership. For White, her own journey to B.C. began when her father accepted a work opportunity in Kelowna. The family packed their belongings and left their hometown of Windsor, Ontario, heading west for new opportunity.

As an adult, White opted for a quieter life in Vernon, establishing an interior design career until a 1993 car accident ultimately led her to change direction.

“The accident hindered my arm in a way that I could not lift my arm properly in order to do construction drawings,” she explained.

She then took a job as a realtor’s assistant in 1995; but after two years, she realized it was not for her.

As she worked to ‘find herself,’ White tried her hand as a real estate agent and then as a financial adviser’s assistant. It was the latter role that helped her discover her niche as a mortgage broker.

“When I was working for the financial adviser, he placed a mortgage through his company. I assisted him with some documents and I thought, ‘Wow, that was fun!’”

White landed a job with a private lender who needed a mortgage broker in Kelowna, launching her mortgage industry career. Twenty-five years later, she’s never looked back.

At the time, White was a single mother of four who felt like she was just starting to get ahead with her job in Kelowna. She was commuting to work every day from her home

28 I WINTER 2024 CMBA-ACHC.CA CMB MAGAZINE industry profile

in Vernon. Then, a second tragic car accident changed her life yet again.

“One of my children was hit head-on by a drunk driver; so at that time, I had to stop working, help my child heal and find something closer to home,” she explained.

White found a job as a mortgage broker with a nearby firm; but after a while, she realized she could no longer work for others whose visions did not align with her own.

In January 2005, she took the bold step of founding White House Mortgages, driven by the desire to create a transparent, personalized and client-centric mortgage service. She believed

that really getting to know her clients would allow her to fully understand their situation –then, she could offer them tailored solutions.

“I think because of what I have gone through in my past, I have true empathy for what others are going through,” she reflected.

White has helped many clients over the years, but certain situations stand out in her mind. She recalls one couple in particular who faced a challenging and heartbreaking situation: “The husband was suffering from dementia and the medication was very expensive; debt was accumulating and the wife was getting behind on the mortgage.”

This is an amazing and wonderful career ride that I am on. If you can embrace it and just stay true to yourself and who you are, you will have a wonderful ride, too.”

White steered those clients into an alternative MIC-based mortgage for one year, which bought them time to get their finances back under control. She’s proud to have helped many clients avoid bankruptcy over the years.

“As mortgage brokers, we make sure we look at their entire financial situation and suggest a product that best suits their needs.”

White said her business model is an amalgamation of her experiences, both professional and personal.

“I learned through my numerous job experiences how to treat people and how not to treat people – whether clients, fellow brokers or employees,” she said.

When she’s not assisting mortgage clients, White can be found helping in her community. Volunteering is important to her; she feels it’s a priority to give back to the community that has always supported her.

She and her husband of 20 years, Doug, also enjoy spending time on the water – either on their boat or on White’s newly acquired Sea-Doo.

Nothing tops family time. “I have four grown children and their spouses, and seven grandchildren. I have a special bond with my children and grandchildren and love spending time with them.”

As CMBA’s national treasurer and the former president of CMBA-BC, White stays connected with industry happenings.

“I think 2024 is definitely going to be a switch year with the prime rate expected to come down. I think it is going to be a very busy year for mortgage brokers,” she predicted.

She also told Canadian Mortgage Broker that she speaks with many people who are holding off on buying, in hopes of getting a good deal following a rash of foreclosures. However, White’s own research and discussions with her lender partners point to this being an unlikely scenario. Instead, White feels some sellers may be downsizing, while others will look to refinance through their mortgage broker.

Through perseverance, commitment and a passion for helping people become homeowners, White has carved out an incredible career.

“This is an amazing and wonderful career ride that I am on,” she concluded. “If you can embrace it and just stay true to yourself and who you are, you will have a wonderful ride, too.”




The Office of the Superintendent of Financial Institutions (OSFI) is exploring additional modifications to the stress test, which may involve adjustments to allowable Gross Debt Service (GDS) and Total Debt Service (TDS), reconsideration of whether borrowers need to requalify for the stress test upon mortgage renewal, and the imposition of limits on the borrowing amount relative to the borrower's income. What is the context for these considered changes, how did we get here? What changes are being contemplated? When are the changes expected to be announced?


The stress test is required to be applied by federally regulated banks, other lenders such as provincial credit unions may apply it voluntarily. It requires a borrower to qualify for their mortgage at a prescribed higher interest rate than the one provided in their mortgage agreement. This helps to protect consumers from taking on more debt than they can reasonably manage and to safeguard the Canadian housing market from potential economic downturns. Additionally, it limits the risk government (and hence the public) takes on in insuring covered lenders from mortgage defaults.



To understand the currently contemplated changes to the stress test, one has to understand the historical context in which they occur.

Regulatory control of the mortgage environment has increased significantly in the last decade and a half. Prior to the 2008 financial crisis, Canada had a more lenient approach to mortgage lending. In the aftermath of the financial crisis, global regulators and policymakers began to reassess financial regulations to prevent a similar crisis in the future. The Office of the Superintendent of Financial Institutions (OSFI), Canada's federal financial regulator, started implementing measures to strengthen the resilience of the financial system.

These measures included reducing the maximum amortization period for high ratio insured mortgages from 40 to 35 years; establishing a 5 per cent minimum down payment requirement; mandating lenders to obtain sufficient evidence of property value, the borrower’s amount of income, and borrower’s income sources; and requiring borrowers, with limited exceptions, to have a minimum credit score of 620.

In 2010, the maximum amount for insured refinance mortgages was reduced from 95 to 90 per cent of loan-to-value.

In 2011, the maximum amortization for a high ratio insured mortgage was reduced from 35 to 30 years. For refinance mortgages, the maximum was reduced to 85 per cent loan-to-value.

In 2012, the maximum for refinances was reduced further to 80 per cent loan-to-value; a $1 million limit was established for the value of a property that secured a high-ratio mortgage covered by default insurance; the maximum amortization was reduced from 30 to 25 years; and the gross debt service (GDS) and total debt service (TDS) were limited to 39 per cent and 44 per cent respectively for high ratio borrowers.

In 2016, OSFI implemented a stress test for all insured mortgages. To be insured, a mortgage had to have been stress tested (that is that borrower had to qualify for it by using the Bank of Canada’s benchmark rate). As well, a new policy required a high ratio mortgage borrower was required to make a 10 per cent, rather than the previous 5 per cent, down payment for the part of the value of the security property in excess of $500,000.

In 2017, OSFI released the B-20 guidelines federally regulated financial institutions must follow in underwriting all residential mortgages, including uninsured mortgages. Significantly, borrowers had to qualify for their mortgage at the greater of the Bank of Canada's 5-year benchmark fixed rate and the contracted mortgage rate plus 2 per cent.

In January 2018, the B-20 guidelines took effect. As well, lenders were required to be more diligent with regard to how the loan funds were to be used (such as for purchasing the subject property) and how the property was to be used (such as owner-occupied, investment or recreational).

In June 2020, underwriting requirements for CMHC-insured mortgages included lowering the maximum GDS ration from 39 to 35 per cent, lowering the maximum TDS from 44 to 42, raising the minimum permitted credit score from 600 to 680 (for at least one household borrower), and banning several types of borrowed down payment.

In June 2021, the minimum qualifying rate for uninsured and insurance mortgages was increased from 4.79 to 5.25 per cent, so that the borrower had to qualify at the greater of 5.25 per cent and the contract rate plus 2 per cent.


This decade and a half evolution of ever-increasing restrictive regulatory requirements brings us to the currently contemplated changes to the stress test. In January 2023, OSFI began consultations on changes it proposed to the B-20 guideline, including more stringent income requirements. It’s response to the feedback indicate it has decided/considered at least the following.

On December 12, 2023 OSFI announced that the minimum qualifying rate for uninsured resident mortgages would remain at the greater of 5.25 per cent or the mortgage contract rate plus 2 per cent.

OSFI announced that TDS and GDS ratios are to be left unchanged for uninsured mortgages The federal finance department announced the same in relation to insured mortgages. The TDS and GDS are 39 per cent and 44 per cent respectively.

Insured borrowers are to be exempt from having to again qualify under the stress test when switching to a new lender. OSFI says that is because the borrower’s credit risk had been transferred for the life of the loan to the mortgage insurer. To be exempt, the loan amount cannot increase and the mortgage amortization cannot change. This exemption allows these mostly high ratio borrowers a freer hand when negotiating renewals of their mortgages, otherwise the very fact that they are in a high-ratio mortgage would likely make it difficult for them to requalify with a new lender and would give the existing lender a tremendous upper hand in negotiations.

Uninsured borrowers who renew with their same lender will not need to satisfy the stress test again.

Uninsured borrowers who renew with a new lender will need to satisfy the stress test again. OSFI said that when a borrower switches lenders, a new loan is created and so it must be underwritten afresh. The new lender must do its own due diligence as it will own the credit risk for an uninsured loan. One can easily imagine that these borrowers will have little power when negotiating their renewal terms.

OSFI is considering making new loanto-value requirements. Regardless of the size of their down payment, borrowers would be capped at a mortgage of no more than 450% of their income. OSFI notes that industry does not support this change. OSFI notes that GDS and TDS focus on affordability whereas as loan-to-income and debt-to-income focus on limiting exposure to high indebtedness.


At the time of publication, OSFI was overdue in confirming with which considered changes it intends to proceed. While the above provides a good indication of the changes to expect, we need to stay tuned. To quote the late, great Yogi Berra, “It ain’t over ‘til it’s over.”


advice in specific instances.
article is not intended as legal advice. You are advised to obtain legal
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Self-described “propeller head” Phill Moran has a lot to say about artificial intelligence in financial services. It’s no surprise, given that Moran and Chamin Bellana started Lexington Innovations more than eight years ago to help banks,

Phill for an AI tell-all, exploring the pros and cons of one of the hottest banking technology trends. Together they cover the differences between rules-based technology and true AI, show how one bank used AI to track and predict money laundering activity, discuss whether there’s a role for large language models like ChatGPT in financial services and more.

36 I WINTER 2024 CMBA-ACHC.CA CMB MAGAZINE artificial intelligence


Zhang: What is the current state of AI adoption in the financial services industry?

Moran: Right now, all the AI in financial services is proofs of concept. All the big banks are doing an anti-money laundering (AML) and fraud program in a narrowly defined AI engine. But because AI tools are mostly focused on reducing losses rather than increasing profits, spending on these tools falls lower on the priority list for financial services companies. That said, people are interested in what’s hot and there’s a lot of talk about AI right now. I see great potential for AI in call centers, fraud detection, AML, broker management and social media screening for financial institutions. For example, it would be suited for credit unions because credit unions monitor their members to make sure they’re worthy of membership. But AI is surprisingly expensive.

“AI isn’t rules based – it’s machine learning. The AI engine will go over the data and identify transactions that sit outside the normal curve. Instead of 90 per cent false positives, you’ll get down to 60 per cent or less.

Zhang: What adds to the cost of AI tools?

Moran: It’s all around the data model. AI is not like an Excel spreadsheet. The AI model that you would use for fraud, for instance, is different from the model for AML because it’s different data. Getting good results takes good quality data, time and potentially multiple models. You have to break the engine down and rebuild it until the model starts showing some cohesiveness. Once you’ve got that, then the feedback loop starts and the model can start learning. This can be time consuming and expensive.

Zhang: How are financial services firms already using AI?

Moran: Many financial institutions think they’re using AI now but they really aren’t.

There are two technology models: rules-based and machine learning. Let’s

take fraud as an example. With a rulesbased model, suspicious transactions – those over a certain dollar value, for example – are reported on a giant Excel spreadsheet and given a risk score, and somebody must manually review and determine whether they’re worth any follow up. Employees are supposed to look at north of 90 per cent of transactions, but that’s not sustainable and it doesn’t happen.

AI isn’t rules based – it’s machine learning. The AI engine will go over the data and identify transactions that sit outside the normal curve. Instead of 90 per cent false positives, you’ll get down to 60 per cent or less. And unlike rulesbased models, an AI engine learns over time from the data we feed it and can tell you why certain activity is suspicious.

At this time, financial institutions seem to lean towards using the rulesbased model. That’s because users are


unsure what the output means if they can’t prove via a rule where it came from. Their technology providers have said the rules engines are now artificial intelligence, but that’s not actually the case.

Zhang: Can you give a hypothetical example to show us how AI works for AML compliance?

Moran: AI can be especially beneficial for AML because it highlights anything outside the norm. For example, this person has a higher transactional volume than most people. Or this person’s transactions go through more countries. Or their transactions are all in countries where it’s easier to launder money.

The AI engine flags all of those, the user looks at them and determines whether they’re fraudulent, and over time the engine gets smarter – without developers being involved. Eventually the engine will know, for example, that this person has family overseas, or this person just started a business, which is why their transactions appeared suspicious. Those people won’t show up again because you told the engine they’re not relevant. And the model improves.

Zhang: Is there a role for a large language model like ChatGPT in financial services?

Moran: Large language models can have useful applications for customer service, but there’s work to be done to avoid introducing bias. For example, you could use a large language model in a call centre to take a customer all the way from a general inquiry to approval for a second mortgage without having a human involved on the bank’s side – all through chat. Let’s say the AI engine behind the call centre chat knows you make $2 million a year and have $5 million in the bank and you live in an expensive neighbourhood. You’re approved. But if your home address was different, you might not be approved. This is where the issue of bias comes in. A large language model will always come back with a result, but it won’t tell you its level of confidence in the answer or how it got there. The AI

models used today in money laundering or fraud detection, which aren’t large language models, are based on numbers, not words. Unlike large language models, they are able to tell you why they give the answers they do.

Zhang: So there’s a risk of bias and errors with large language models. How about the human resources risk –replacing people with AI?

Moran: I don’t see AI replacing workers, just completing tasks more efficiently. Here’s what’s happening with AML today. It’s 5 o’clock in the afternoon and a bank employee receives a 10,000-line Excel spreadsheet to review and flag for potential fraudulent transactions. Nobody wants that in their job. AI won’t replace that employee’s job but will perform tasks the employee didn’t have time for or didn’t want to do. With the call centre example, customers can complete much of a bank’s process on the web already. AI helps with the little bit the teller or loan officer has to do themselves – the stuff that doesn’t make their job more fulfilling.

Zhang: Can you think of any examples where a bank used AI to flag internal misconduct?

Moran: This is a good one. We ran three years’ worth of a bank’s broker data through an AI model to find the outliers. Most of the data was encrypted, but they left in things like branch numbers, regions and broker titles. In the results, we found that most of the suspicious transactions were coming from one branch. The bank knew that specific branch was troublesome, but they could never identify why.

The data showed the employees with the highest amount of risk had all worked for the same person at that branch. That person had moved to another branch, and you could see the next wave of aberrant behavior from the managers working under that same person. AI was able to take large sets of data and spot trends that wouldn’t have been apparent to an individual reviewer.

“It’s 5 o’clock in the afternoon and a bank employee receives a 10,000line Excel spreadsheet to review and flag for potential fraudulent transactions. Nobody wants that in their job. AI won’t replace that employee’s job but will perform tasks the employee didn’t have time for or didn’t want to do.

Zhang: Can AI have a role in prevention of fraud?

Moran: Absolutely. In the broker management example I just gave, a great revelation for the bank was that the AI model can learn from the data of people we know laundered money. What did their transactions look like? The model can use these patterns to predict who may launder money in the future. Now the bank can proactively address areas, conduct or people of concern, potentially stopping the money laundering in the first place.

Zhang: How soon do you see AI becoming part of the day-to-day in financial services?

Moran: I think it will happen over the next couple of years. Canadian regulators have said banks need to be moving in this direction. And it’s cool tech. ChatGPT has helped because people in financial services are using it and becoming comfortable with it. It won’t be long before they see the power of AI for fraud. They’ll continue to use the rules-based models but soon they’ll see the AI engines are pinpointing issues much faster and they’ll stop looking at the spreadsheets.

Zhang: You mentioned these tools are expensive. So, where should a financial services organization spend their money on AI?

Moran: They should really start with fraud. It’s a problem they need to solve. It will take the spreadsheets away from their employees. And eventually, they’ll be able to use the predictive nature of AI to work with HR to make sure their people don’t engage in fraud in the first place.

Borden Ladner Gervais LLP (BLG) is the largest truly full-service Canadian law firm. A senior associate in BLG’s Toronto office, Cindy Zhang specializes in financial services, financial services regulatory, banking, lending and financing and structured finance and securitization. More information:

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New proposed measures to disincentivize short-term rentals which are non-compliant with local jurisdiction

Canada’s continued housing crisis has prompted the Federal government to introduce measures to disincentivize short-term rentals (STR) in order to free up units for long-term rentals. These proposed measures will deny expenses of short-term rentals which are non-compliant with local regulations. These new measures may result in increased rental income by the taxpayer, making the STR business model less appealing and viable.


Canada’s continued housing crisis has prompted the Federal government to introduce measures to disincentivize short-term rentals in order to free up units for long-term rentals. The 2023 Federal Economic Statement (FES) stated that in just three major Canadian cities – Toronto, Montreal, and Vancouver – an estimated 18,900 homes were being used as STRs in 2020. This figure is likely an underestimation. For example, one study has estimated that more than half of Toronto’s STRs in 2023 were unregistered.

The Federal government has proposed new measures to deny expenses to STRs which are non-compliant with local regulations. These measures join other housing affordability measures including the Underused Housing Tax Act and First Home Savings Account.


STR units are properties that are rented, partially or wholly, for a matter of days or weeks. Across Canada, an estimated 235,000 STRs were active in 2023. Legislation has already been passed at the provincial and municipal levels to curb the use of STRs by prohibiting these types of rentals in certain circumstances.

40 I WINTER 2024 CMBA-ACHC.CA CMB MAGAZINE tax legislation


Various municipalities already have by-laws limiting the use of STRs. These include Toronto, Montreal, Ottawa and Calgary. British Columbia has passed similar legislation, which applies more stringently to areas with populations of 10,000 or more.

Most of these jurisdictions allow an operator to rent an STR only if it is their primary residence, thereby limiting the operator to just one STR property. There are also different limitations on the number of bedrooms that may be rented, the number of days for which the property can be rented, and the number of tenants per a rented room. The municipal and provincial rules also impose requirements for: licenses, permits or registration; insurance; and record-keeping and disclosure of rental details (such as the length of a rental and its price). Record and disclosure requirements are also imposed on STR rental platforms, such as Airbnb and VRBO.

Similar rules limiting STRs have been implemented in other jurisdictions including New York City (Local Law 18); Florence, Italy; and Byron Bay, Australia.


In December 2023, the Department of Finance published proposed legislation which would deny income tax deductions for expenses incurred by certain STRs on or after Jan. 1, 2024.

These proposed rules apply to STRs which are non-compliant, meaning not permitted to operate due to applicable municipal or provincial regulation. The expenses denied are the expenses incurred during the year multiplied by the proportion of days of the STR’s operation during the year where it was non-compliant. For example, if the operator’s STR was non-compliant for one-quarter of the time the property was an STR, the CRA would deny one-quarter of the expenses that were claimed in respect of the use of that unit.


Generally, rental income is taxed on a net basis, due to the principle that taxes should apply to profits and not the cost of doing business. This makes expenses very attractive to operators of rental properties from a tax perspective, as their expenditures offset revenue and reduce

their overall tax bill. However, under the new Federal legislation such offsetting is barred for non-compliant operators. Where an operator cannot deduct rental expenses, their taxable income will be higher, in some cases by tens of thousands of dollars, in turn resulting in higher taxes overall. Ideally, this would make the STR business model less appealing and viable to pursue.

An example of this is outlined in the FES: a fictional operator earns $120,000 of rental income annually from three STRs; to operate these STRs, they spend an estimated $120,000 per year. This operating cost includes mortgage interest, cable and internet bills, property insurance, condo fees, property taxes and capital cost allowance. Assuming this operator’s STRs were non-compliant year-round, the new legislation would bar them from deducting the entire operating expense of $120,000. The FES states this would mean an added cost of $33,100 in federal tax per year, which does not include the increased provincial tax burden.

Additionally, taxpayers that have long-term leases that legally become month-to-month leases should be aware of these changes as shortterm rentals are defined as “a period of less than 90 days” in the proposed legislation and could result in the rental being classified as off-side.


Enforcing the proposed legislation depends on identifying non-compliance under provincial and municipal regulation. Generally speaking, the provincial and municipal governments have similar STR compliance requirements. These include requirements that records of rental transactions be maintained by the STR operator or STR platform (or both), and that these be provided to the relevant government upon request. Some jurisdictions, such as Toronto and Calgary, have even produced registries of licensed STR units.

To enforce the regulations on STRs, some jurisdictions require a rental platform to remove an STR listing with an invalid registration. A variety of fines and penalties are in place for non-compliant operators. The City of Toronto has released data showing that it identified over 3,500 STR complaints between January 2021 and November 2023.

In spite of the various methods utilized by local governments to tackle the issue of non-compliant STRs, some commentators view

the Federal legislation’s goals as easily thwarted. They note that crafty STR operators can simply attribute their non-compliant STR’s rental income to their primary residence, thereby skirting local rules. It is unclear how the Federal government could mitigate such a tactic.

The Federal legislation may still be ineffective because ensuring the expenses are properly denied requires obtaining information from local enforcement units. Where local enforcement is lacking, the Federal legislation becomes effectively inoperative. Despite its commitment to providing funding to assist municipalities in their STR enforcement, the Federal government lacks direct oversight over municipal and provincial enforcement operations.

Furthermore, the success of the expense denial measure in decreasing the number of STRs will depend on the strictness of the rules set by provinces and municipalities. As jurisdictions have not instituted identical rules, some are more tolerant of STRs than others. For example, unlike most jurisdictions, Montreal’s STR rules do not require the unit to be an operator’s primary residence. Due to a lack of uniformity, it is the strictness of each local government’s compliance scheme that will determine how much disincentive STR operators face.


In an effort to alleviate the housing crisis in Canada, the Federal government has effectively imposed a tax on non-compliant short-term rental units. This new measure increases the impact of pre-existing municipal and provincial regulations governing STRs. The Federal legislation’s effectiveness will be determined by how strict local regulations are and how diligently are enforced by local authorities. As a result of the new Federal rules, operators of STRs must familiarize themselves with municipal and provincial rules to avoid a substantial increase in their tax bill.

RSM Canada LLP provides public accounting services and is the Canadian member firm of RSM International, a global network of independent assurance, tax and consulting firms. At RSM Canada LLP Clara Pham is a partner; Farryn Cohn is senior manager, and Jim Niazi is associate. More information:



Steps to address money laundering and terrorist financing risks and activities

From October 11, 2024 the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the Act) will apply to mortgage administrators, brokers, and lenders (together referred to in this article as mortgage participants). From this date mortgage participants will have to comply with the Financial Transactions and Reports Analysis Centre of Canada’s (FINTRAC) reporting and related requirements.

FINTRAC is Canada’s financial intelligence unit and antimoney laundering and anti-terrorist financing supervisor. It facilitates the detection, prevention and deterrence of money laundering and the financing of terrorist activities.


Mortgage participants (administrators, brokers, and lenders) will need to comply with the requirements.

A mortgage administrator is a person or entity, other than a financial entity, engaged in the business of servicing mortgage

agreements on real property on behalf of lenders. A mortgage broker is a person or entity authorized under provincial legislation to act as an intermediary between a lender and borrower with respect to mortgage loans. A mortgage lender is a person or entity, other than a financial entity, engaged in the business of providing loans secured by mortgages. Financial entities (essentially banks, provincial credit unions, trust companies, and provincial loan companies regulated under other federal or provincial legislation) are excluded from the definitions of mortgage administrator and mortgage lender, presumably because their respective governing legislation already covers activities in these and/or similar areas.


The specific compliance requirements for mortgage participants are expected to be further detailed before October 11, but the framework addressing the requirements, FINTRAC’s right to conduct compliance reviews and assessments, and penalties for non-compliance is in place.

compliance requirements

Mortgage broker participants will be required to implement a compliance program, report certain transactions to FINTRAC, keep required records, practice ‘know your client,’ and apply ministerial directives.


Mortgage participants will be required to develop a compliance program. The program must include a compliance officer responsible for implementing the program.

The program will need to include up-todate compliance policies and procedures setting out the applicable obligations under the Act and the processes/controls addressing those obligations. If the party is an entity as opposed to an individual, these policies and procedures must have been approved by a senior officer of the mortgage participant (a director, the chief executive officer, chief operating officer, president, secretary, treasurer, controller, chief financial officer, chief accountant, chief auditor, chief actuary, or any other officer who reports directly to the entity’s board of directors, chief executive officer or chief operating officer).

A risk assessment reviewing, assessing, and documenting potential money laundering and terrorist activity financing risks of the business will need to be completed. Money laundering is essentially disguising the source of money or assets that was obtained from criminal activity. It is transforming dirty money (derived from criminal activity) into clean money (dirty money of which the origin is difficult to trace). Terrorist financing is essentially knowingly collecting or giving property (such as money) to support terrorist activities being carried out. The risk assessment can help establish policies, procedures and controls to detect and mitigate the identified risks and their impact. If a high risk is identified, written policies to mitigate the risk must be implemented.

The mortgage participant will need to have a written, ongoing compliance training program for its employees, agents, or other individuals authorized to act on the mortgage participant’s behalf. It should contain information about all applicable obligations and requirements under the Act.

There will need to be a documented plan to implement a review of the compliance

program to test its effectiveness. The review will be required to be carried out at least every two years by an internal or external auditor to test the effectiveness of the policies and procedures, risk assessment, and training program.


As of October 11, mortgage participants will be required to provide reports to FINTRAC concerning suspicious transactions, terrorist property, large cash transactions, and large virtual currency transactions. If more than one of these categories applies to a transaction, you will need to file a separate report for each applicable category.

Suspicious Transaction Report

A suspicious transaction report must be submitted to FINTRAC when there are reasonable grounds to suspect that a financial transaction is related to a money laundering or a terrorist activity financing offence. Also, the report must be submitted if the


transaction or offence is not successful but was attempted.

To determine whether there are reasonable grounds to suspect a transaction is related to money laundering or terrorist financing, you should screen for and identify suspicious transactions, assess the facts and context surrounding the suspicious transaction, link indicators to your assessment of the facts and context, and explain your grounds for the suspicion. Once you determine there are reasonable grounds for your suspicion, you are required to file the report as soon as practicable. This means you must treat the matter as a priority, any delays may need to be explained.

Duplicate reporting will not be required – an employee need not file a suspicious transaction report if their employer actively reports such transactions.

Guidance on how to complete and file the report can be found at fintrac-canafe.

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compliance requirements

Terrorist Property Report

A terrorist property report must be submitted to FINTRAC if you know you have property in your possession or control that is owned or controlled by or on behalf of a terrorist or a terrorist group. Some examples of such property are cash, cheques, bank drafts, money orders, registered retirement savings plan, tax-free savings accounts, and real estate (including an instrument that gives title or right to a property).

Guidance on how to complete and file the report to FINTRAC and to the RCMP or CSIS can be found at guidance-directives/transaction-operation/ Guide5/5-eng.

Large Cash Transaction Report

A large transaction report must be submitted to FINTRAC if you receive $10,000 or more in Canadian or foreign cash in a single transaction. Monies received by cheque, money order or other similar negotiable instruments, or virtual/digital currency are not to be included in this amount.

The $10,000 threshold is reached if this amount or more is received within 24 hours by way of smaller amounts and you know that the transaction(s) is conducted by or on behalf of the same person or entity, or for the same beneficiary.

Guidance on how to complete and file the report to FINTRAC and to the RCMP or CSIS can be found at guidance-directives/transaction-operation/ lctr-doie/lctr-doie-eng.

Large Virtual Currency Transaction Report

Similar requirements as indicated above for large cash transaction reports apply where the transaction is not by way of cash but rather by way of virtual currency worth $10,000 or more.

Guidance on how to complete and file the report to FINTRAC and to the RCMP or CSIS can be found at mortgage-hypotheque-eng


There is no guideline currently available for the mortgage sector regarding its specific record-keeping obligations, however the Act contains some generally applicable requirements.

You must keep the following records for at least five years:

n copies of every report sent to FINTRAC

n large cash transaction records

n large virtual currency transaction records

n receipt of funds records when you receive any amount in connection with a mortgage on real property containing:

• the date of the receipt;

• if the amount is received from a person, their name, address and date of birth and the nature of their principal business or their occupation;

• if the amount is received from or on behalf of an entity, the entity's name and address and the nature of their principal business;

• the amount of the funds received and of any part of the funds that is received in cash;

• the method by which the amount is received;

• the type and amount of each fiat currency involved in the receipt;

• if applicable, the exchange rates used and their source;

• the number of every account that is affected by the transaction in which the receipt occurs, the type of account and the name of each account holder;

• the name and address of every other person or entity that is involved in the transaction, the nature of their principal business or their occupation and, in the case of a person, their date of birth;

• every reference number that is connected to the transaction and has a function equivalent to that of an account number; and

n the purpose of the transaction

• information records in the following circumstances:

• in the case of a mortgage administrator, when they service a mortgage agreement;

• in the case of a mortgage broker, when they arrange a mortgage loan;

• in the case of a mortgage lender, when they provide a mortgage loan or when they raise funds for a mortgage loan.

n mortgage loan records, which includes:

• the financial capacity of the client

• the terms of the loan

• the nature of the client’s principal business or their occupation, and

• the name and address of their business or place of work if the client is a person

n copies of the part of official corporate records containing any provision relating to the power to bind the corporation if the

receipt of funds record or information record is for a corporation

n beneficial ownership records

n politically exposed persons records

n client identification records

n records related to any business relationship and ongoing monitoring

n third party determination records

If you are required to keep a record with information that is readily available in other records, you do not have to record the information again.

You do not have to keep records of a large cash transaction, a large virtual cash transaction or a receipt of funds records if the amount received is from a financial entity, a public body, or a person acting on behalf of a client that is a financial entity or a public body.


You will be required to verify the identity of any person or entity for the following transactions, or when the following records are required to be kept: suspicious transactions, large cash transactions, large virtual currency transactions, receipt of funds records, information records, and mortgage loan records.

The simplest method to verify identity is to use government-issued photo identification. The document must be authentic, valid and current; be issued by a federal, provincial or territorial government (or by a foreign government if it is equivalent to a Canadian document); indicate the person's name; include a photo of the person; include a unique identifying number; and match the name and appearance of the person being identified.

Guidance on how to use government-issued identification documents to verify the identity of a person who is not personally present and how to use other verification methods can be found at fintrac-canafe.


Ministerial directives are issued from time to time. They will apply to all mortgage participants except if they otherwise specify.



FINTRAC may conduct a compliance examination or assessment. They may review the implementation of a compliance program, the reporting of all required transactions, the implementation of client identification, and the keeping of required records. The focus is to be on assisting the mortgage sector in understanding their obligations.


The Act will authorize FINTRAC to issue administrative monetary penalties (AMP) to mortgage broker reporting entities who are not compliant with the Act. Minor violations carry an AMP of $1 to $1,000 per violation, serious violations from $1 to $100,000 per violation, and very serious violations from $1 to $100,000 per violation for an individual and $1 to $500,000 for an entity.

FINTRAC makes public, as soon as feasible, the name of the violator, the nature of the violation or default, and the amount of the penalty.

Where a person or an entity is also regulated by another body, FINTRAC may share information regarding the person's or the entity's compliance.

FINTRAC is authorized to disclose information to law enforcement when it suspects on reasonable grounds that the information would be relevant to investigating or prosecuting a non-compliance offence under the Act.


On October 11, 2024 mortgage participants will be required to comply with the Act’s and FINTRAC’s requirements addressing money laundering and terrorist financing risks and activities. Clearly before then you will need to assess your own needs and train yourself or secure the services of a compliance officer, develop the programs required to be implemented, and be prepared to submit the required reports when warranted. Structuring a robust compliance program early will put you in good stead to continue carrying on business around and after October 11th without undue stress.

This article is not intended as legal advice. You are advised to obtain legal advice in specific instances.

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