B.C. steps up crackdown on real estate money laundering

By: Jessica Mach on September 28, 2018

The government of British Columbia unveiled new plans to crack down on money laundering on Thursday, seven months after a Globe and Mail exposé revealed that Vancouver’s affordability crisis can be partly credited to people parking money earned from illegal activity in local real estate.

The province will launch a two-pronged review into how provincial and municipal loopholes have made money laundering possible. The first part of the review, led by the Ministry of Finance, will identify systemic risks in the financial services and real estate sectors. The second part, which will be conducted by the Attorney General, will look at specific examples of money laundering in the province and investigate how it was able to flourish.

The Ministry of Finance will additionally hold an expert panel on money laundering in real estate, and is set to produce a report on its findings by March next year. The panel will examine how existing laws, consumer protection, financial services regulations, and regulations for real estate professionals are being enforced and complied with. It will also look at loopholes that exist between provincial and federal laws.

The new probe is being launched in response to previous reports commissioned by the Ministry of Finance and the province's attorney general.

An analysis by former public servant and independent consultant Dan Perrin concluded that the province’s current real estate regulations are “dysfunctional, inefficient and vulnerable to market manipulation and abuse,” according to a release from the province. Another investigation by lawyer and former RCMP executive Peter German, which looked at money laundering in Lower Mainland casinos, found that dirty money was infiltrating the city’s real estate.

“The multi-faceted approach announced today is an attempt to move quickly to anticipate and shut down new avenues for money laundering, and to follow up on specific cases that Dr. German and the media have drawn to the public and government’s attention,” said B.C. Attorney General David Eby.

The Globe and Mail investigation sparked uproar in February when it revealed that people with connections to China and the fentanyl trade were parking millions of dollars in Vancouver real estate as part of a widespread money laundering scheme.

A week later, the government of B.C. unveiled a slew of regulations to address tax fraud and real estate loopholes as part of a 30-point plan for housing affordability. These include laws to track pre-sale condominium contract assignments, cracking down on tax evasion, and establishing a public registry of beneficial owners — people who have property rights for pieces of real estate, but do not hold legal title to them. These owners typically register their properties to a trust or a corporation in order to conceal their identities and avoid certain responsibilities of homeownership.