Canada Becomes Hotspot for Money Laundering Due to Lax Real Estate System

Canada’s weak money-laundering laws, especially when it comes to real estate monitoring,  has left areas like British Columbia vulnerable as an attractive place to store ill-gotten cash. The main way this works is through buying real estate with little to no information to verify the identity of those involved in the purchasing. In 2018 alone, $5 billion was laundered through real estate in British Columbia.

Many proprietors of ill-gotten funds will often attempt to hide them by first mixing them with legitimate proceeds. This can include something like a business they operate. They then will transfer these funds into a bank, which are limited in how much information they can gather about the client’s day-to-day transactions. Finally, these funds are funneled into shell companies, or companies known to only be made for financial juggling, and then in some cases use those companies to buy up real estate in tax havens that will allow for tax breaks as well as the anonymity they require.

For these launderers, houses, condominium floors, and mansions can all act as a sort of bank account. While it may not be physically active money, they are assists in the form of bricks-and-mortars that keep their finances safe and sound. This system usually leaves a good portion of vacant properties, which naturally causes real estate prices to rise.

“It’s easy as pie,”, states author of a recent C.D. Howe report on money laundering, Kevin Comeau. “You can do it in about five minutes, and you don’t have to disclose anything.”, he added.

Canada is known to have the weakest laws governing money-laundering among liberal democracies, and the lack of transparency is clearly drawing criminal attention. According to B.C. deputy attorney general Naureen Maloney, some $7.5 billion was laundered last year out of the $47 billion reported throughout Canada.

Comeau, in the report from the C.D. Howe Institute, recommended tightening regulations with more public accessibility and mandatory declarations of beneficial ownership. These would work alongside the sanctions for false declarations.

Just in recent months, the British Columbia government introduced new legislation in hopes of preventing tax evasion and money laundering. This legislation would clearly identify anonymous real estate owners in hopes of paving the way for more anti-money laundering promotions across Canada.

Those who are interested in learning more information about cases like this, or who want to keep up-to-date on the latest legal proceedings, please visit Jeff Newman Law help center and blog.