British Columbia
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.
Reports point to numerous gaps allowing criminals entry to province's housing market
Bethany Lindsay · CBC News
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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 of2018 purchases werefor 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.
- Listen to SOLD!, a CBC Vancouver original podcast on B.C.'s real estate market
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 ratesand purchases by homemakers and students, for example.
Both documents identify numerous gaps in provincialand federal systems for keeping track of purchases and reporting suspicious transactions.
- Read more stories about B.C.'s money-laundering controversy
- Fast cars and bags of cash: Gangsters using B.C. luxury car market to launder dirty money
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 homebuildersaren't required toreport suspicious transactions to the Financial Transactions and Reports Analysis Centre (FINTRAC).
- There's little flow of information betweenFINTRACand 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 willmake information about property owners publicly available.But it also suggestedways 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.
- CBC InvestigatesFormer RCMP proceeds of crime head warned bosses of weakened dirty money investigations
- No federally funded RCMP officers dedicated to money laundering in B.C., report reveals
ABOUT THE AUTHOR
Bethany Lindsay
Journalist
Bethany Lindsay is a former journalist for CBC News who reported extensively on the courts, regulated professionals and pseudolegal claims.
With files from Karin Larsen
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