May 13, 2019
A report that estimates $5 billion was laundered through British Columbia's real estate market last year also lifts the lid on the extent of illegal cash moving across Canada.
Overall, $7.4 billion was laundered in the province last year, $5b of which went through real estate. But the panel, led by former B.C. deputy attorney general Maureen Maloney, determined that money laundering is more prevalent in Alberta, Ontario and the Prairies than it is in Canada’s third-largest province.
“What this report makes clear is this is not an issue simply for B.C.,” Finance Minister Carole James said during a Thursday news conference. “This is an issue for all of Canada. This is an issue for all jurisdictions.”
James added that the B.C. government is prepared to take immediate action.
How the government will tackle the problem of money laundering remains to be seen, but it isn’t implausible to think that sweeping legislation could be on the horizon. Arguably more arduous than curbing money laundering is the process of restoring confidence in a real estate market that’s grown beyond the reach of most residents, especially in Vancouver.
Robert Mogensen, a broker with The Mortgage Advantage, hopes that the provincial government will be wary of further short-shrifting consumers.
“I think that oversight is a good thing, but I’m not a big fan of government intervention, as far as taxes and regulations on residents go,” he said. “But I’m behind the foreign buyer tax, for instance, and behind more oversight with regards to establishing the source of cash for down payments from offshore buyers.”
Mogensen, furthermore, believes one course of action the government should take is proscribing trust accounts.
There are thousands of specific properties worth billions at high risk for potential money laundering, German's report says.
“His findings are stark evidence of the consequences of an absence of oversight, the weakness of data collection, and the total indifference of governments until now to this malignant cancer on our economy and our society,” Eby said of German's report.
Portions of German's latest report were previously released, including on the limited police resources dedicated to fighting money laundering in B.C. and links to luxury vehicle sales and horse racing.
Eby said earlier this week he was shocked to hear some criminals laundering money through B.C.'s luxury car sector were getting provincial sales tax rebates when they sent the car out of the province.