A mortgage broker suspects that a client, who is offering a large cash down payment for a luxury property, may be involved in money laundering. The client is evasive about the source of funds and provides conflicting information. What is the broker's primary obligation under Canadian anti-money laundering (AML) legislation?

Question: A mortgage broker suspects that a client, who is offering a large cash down payment for a luxury property, may be involved in money laundering. The client is evasive about the source of funds and provides conflicting information. What is the broker's primary obligation under Canadian anti-money laundering (AML) legislation?

Answer options: ✅ File a Suspicious Transaction Report (STR) with FINTRAC, even if it might alert the client.

• Decline to proceed with the mortgage application without explanation to avoid tipping off the client.
• Ask for more documentation to be absolutely certain before taking any action.
• Inform the local police detachment directly about the suspected activity.

Correct answer: File a Suspicious Transaction Report (STR) with FINTRAC, even if it might alert the client.

Explanation: Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), mortgage brokers are reporting entities and are legally obligated to report suspicious transactions to FINTRAC immediately upon forming a reasonable suspicion, regardless of the amount. The 'no tipping off' rule means they cannot disclose the filing of an STR to the client.