Money laundering hikes BC real estate prices by five per cent: report
VICTORIA — The cost of buying a home in B.C. increased by as much as five per cent last year due to more than $5 billion in dirty money from organized crime laundered through the province’s real estate sector, according to a new expert panel report.
She said actual figures are difficult to calculate — at one point dubbing them “estimating the inestimable” — but that the prevalence of dirty cash and organized crime trying to avoid taxes has distorted the economy.Of that, $7.4 billion was in B.C., making it only the fourth-highest in the country behind Ontario, Alberta and the Prairies.
“The housing affordability problem cannot be solved by reducing money laundering but reducing money laundering can certainly help,” Maloney wrote. Eby cited several examples of money laundering, including a self-declared “student” who bought 15 properties in the same Vancouver condo building in 2001 for $2.9 million. Those units are now worth $11 million.
Another example was a $3.5 property on a Gulf Islands acquired with “funds allegedly embezzled from a $90 million loan fraud at an Indian bank,” said Eby. The Real Estate Board of Greater Vancouver said it is already attempting to address concerns with proactive recommendations for greater transparency and reporting that it made to Eby last month.“I think we have heard that from the industry and we are working on more education,” said executive officer Erin Seeley.
“We talk about if you have a buyer who suggests giving cash or being creative in a deal, there are ways to report. But what do we do if someone uses six different realtors to buy six condos in some building? An exact amount of criminal oversea owners wasn’t determined by the report due to the “poor quality” of data, as well as gatekeepers such as lawyers, accountants, notaries and other professionals that take advantage of B.C.’s opaque land title rules, according to German’s report.
He pointed to red flags for dirty money laundering, such as purchases by nominees or straw men third parties , and cash purchases, private mortgages . Another gap is the use of trust accounts by lawyers, which German cited in his report are essentially a black hole of solicitor client privilege because investigators can only trace suspicious money until it reaches the lawyer, who holds it in trust for a client and then it becomes untraceable.
Money laundering is taking place in the luxury car market in B.C., sometimes with the use of bags of cash, a May 7 report by German found.
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