https://www.cbc.ca/news/canada/british-columbia/laundered-money-bc-real-estate-1.5128769
https://www.cbc.ca/news/canada/british-columbia/bc-money-laundering-real-estate-reports-released-may-2019-1.5128769
An estimated $5.3 billion worth of real estate transactions in B.C. last
year were the result of money laundering, helping to fuel the province's
skyrocketing housing prices, according to a new report.
An expert panel on dirty money in the overall real-estate market
estimates that five per cent of the value of 2018 purchases were for
laundering purposes, contributing to about a five per cent rise in
housing prices.
The effect could be more significant in certain markets, including Metro
Vancouver, according to the panel, which was commissioned by the
provincial government.
Altogether, dirty money in the real estate market accounted for an
estimated 72 per cent of the $7.4 billion that the experts believe was
laundered in total in B.C. last year.
"Our economy should work for regular people, not criminals," said B.C.
Finance Minister Carole James. "Housing should provide shelter, not a
vehicle for proceeds of crime."
James said the province will be looking closely at all 29
recommendations put forward by the report, called Combating Money
Laundering in B.C. Real Estate.
"For me, the most important piece of action is transparency — shining
that light, taking away that opportunity to hide," she said.
The panel was chaired by criminal law expert Maureen Maloney.
Its report was one of two released Thursday that examine the influence
of money laundering in B.C.'s real estate market. Both paint an alarming
picture of how criminals are using homes to clean their cash.
Former RCMP deputy commissioner Peter German produced the second report,
named Dirty Money Part 2, which outlines some of the red flags that
signal when illegal money is behind a real-estate purchase — including
unfinanced purchases, private lending, unusual interest rates and
purchases by homemakers and students, for example.
Both documents identify numerous gaps in provincial and federal systems
for keeping track of purchases and reporting suspicious transactions.
The reports are just the latest entries in B.C.'s ongoing investigation
into how proceeds of crime are being cleaned in this province.
Earlier this week, German released findings on money laundering in the
luxury vehicle sector, information that Attorney General David Eby
called "incredibly disturbing."
A year ago, German issued his first report, Dirty Money, detailing
extensive links between money laundering and B.C. casinos.
The gaps
Both reports identify numerous gaps in regulatory systems at both the
federal and provincial levels that have allowed money laundering to
flourish in real -estate transactions. Here are just a few:
Mortgage brokers, lawyers and homebuilders aren't required to
report suspicious transactions to the Financial Transactions and Reports
Analysis Centre (FINTRAC).
There's little flow of information between FINTRAC and law
enforcement agencies.
B.C.'s Land Title and Survey Authority collects data in a haphazard
way that makes it difficult to analyze trends. The database includes
multiple spellings for every bank, along with homeowners who describe
their occupations as things like "super dad" or "domestic diva."
Police agencies in B.C. have come to depend heavily on the civil
forfeiture system to deal with money laundering and proceeds of crime
cases, rather than using criminal laws that were designed to dismantle
criminal organizations.
The recommended solutions
The expert panel applauded some of the actions already underway in B.C.,
including a beneficial ownership registry that will make information
about property owners publicly available. But it also suggested ways to
close those gaps, including:
Regulating real estate developers through a licensing system.
Replacing the Mortgage Broker Act.
Improving data sharing between agencies that deal with money
laundering.
Creating a new financial investigations unit at the B.C. Ministry
of Finance.
Making more professionals accountable to FINTRAC.
The panel also suggests a drastic new measure that would build upon
B.C.'s criminal and civil forfeiture system, known as unexplained wealth
orders. This would allow the government to confiscate property when
there is no evident legitimate source for the funds to purchase it —
even if there is no evidence of criminal activity.
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