The legislation is that you require a PAL to purchase any firearm, new or used. In the case of a private sale the seller is supposed verify that the purchaser has a valid PAL. As long as they do you can buy, sell and trade to your hearts content. As it should be.
If your question is what is stopping someone from selling a firearm to someone without a valid PAL, you are correct in that there is no paperwork linking the firearm to the owner. Your risk would be that if the purchaser without the PAL gets caught with it and is unable to produce a firearms licence they may inform authorities that you sold it to them in order to get some leniency. If they do and you are convicted you could lose your firearms licence, face fines, legal fees, etc.
I guess the real question is would you risk losing your firearms licence and a criminal conviction to sell a firearm to someone without a PAL. I'm not suggesting you would, but if someone did you would be relying on the hope that if the unlicenced buyer gets caught they will take the rap and keep you out of it. Not worth the risk imo, as when they get in trouble people's self preservation instincts seem to kick in and they are all too willing to throw someone else under the bus to save themselves. And they don't have a PAL why????
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Bruce Ogilvie
"Fish Hard, Hunt Hard, Live Hard"
http://www.muskiescanada.ca/