‘Real Estate and Money Laundering in Canada’

When you don’t monitor money laundering {See below} – and when money is constantly crossing borders – this is one of the consequences:

“According to the ‘Royal Bank of Canada’, Canada’s housing affordability is worse today than at any time since 1990. Housing affordability has now declined for eight straight quarters.

The affordability crisis has slammed Toronto especially hard, with housing now less affordable in that city than at any time ever previously recorded. Efforts by the Ontario government to cool off the housing market have not shown immediate results when it comes to housing prices in the province.

“Despite Toronto’s troubles, Vancouver remains the most unaffordable place to buy a home in Canada…”

–‘Housing Affordability In Canada Hits Worst Level In 27 Years’,
Spencer Fernando, September 29, 2017


“Give us your criminal, your corrupt, your anonymous masses.

“It’s a message that Canada is sending to the world with its “doors wide open” approach to money laundering in real estate, says a new report by ‘Transparency International’ (TI), a Berlin-based organization that works to stop corruption around the world.

“The report looked at anti-money laundering practices in four countries — Canada, the U.S., the U.K. and Australia.

“It evaluated these countries by taking 10 areas where

legal loopholes or weak implementation / enforcement enable the corrupt and other criminals to launder money through the real estate sector” …

“One of the biggest reasons why it’s easy for illicit money to enter Canadian real estate is that it’s not difficult to hide the identities of people who buy homes in the first place.

“Canadian law does not require non-financial professionals doing real estate deals to

identify beneficial owners when conducting due diligence on customers.”

The beneficial owner is someone who receives the benefits of ownership, even if someone else’s name is on the title.

Agents, lawyers, notaries or accountants don’t have to identify a beneficial owner as part of a due diligence process

“There are also some key omissions when it comes to who’s required to carry out due diligence in the first place.

“In Canada, you have to do due diligence or submit suspicious or large cash transaction reports if you’re a real estate agent, a broker, a developer or an accountant.

You don’t have to do that if you’re a lawyer, a law firm or a notary from Quebec.

“Lawyers used to have to do this under the ‘Proceeds of Crime (Money Laundering) and Terrorist Financing Act’ (PCMLTFA).

“But that requirement was lifted after {fellow lawyer/judges on} the Supreme Court of Canada decided that it would

interfere with the lawyer’s duty to keep client information confidential”, the report said.

“The rules around foreign companies also provide an opportunity for funds to enter Canada without many checks.

In Canada, foreign companies can buy property without providing any information about their real owners or their corporate structure. The only info that’s recorded in a registry is the title holder — and even that can just be a trust or a shell company.

“Stronger anti-money laundering rules could be particularly useful in a place like Greater Vancouver, where governments can’t identify the owners of almost half of the region’s 100 most valuable homes, according to a previous TI report.

“The city has also been the focus of efforts by the Chinese government to recover the proceeds of corruption, a report by the ‘Financial Action Task Force’ (FATF) said last year.

The Chinese government has listed Canada as a country that it wishes to target for recovering the proceeds of Chinese corruption. Canada may be particularly vulnerable to such laundering, as there is no extradition treaty with China.” …”

–‘Canada’s doors are ‘wide open’ for criminals to launder money in real estate: report’,
Jesse Ferreras, Global News,April 1, 2017





Of particular concern are real estate schemes in which a foreign or domestic criminal provides cash to a local buyer, or more sophisticated schemes where loans and mortgages are combined with lawyers’ trust accounts to move money around quietly.

The ‘Canada Revenue Agency’ is investigating questionable transactions in the Vancouver real estate market, part of a wider study the federal government is doing into ever-rising housing prices there and in Toronto.

“The report released Thursday suggests the risk of criminals using real estate to launder money and proceeds of crime is a cross-country issue and not solely focused on Toronto and Vancouver, It says Quebec is another region where there is a risk of abuse

“It also says relying on lawyers is problematic because their actions on behalf of a client can’t be probed by law enforcement agencies, as the Supreme Court of Canada has held that those transactions are protected by solicitor-client privilege.

In light of these professionals’ key gatekeeper role, in particular in high-risk sectors and activities such as real-estate transactions and the formation of corporations and trusts, this constitutes a serious impediment to Canada’s efforts to fight (money laundering),” the report says.

“The government supports the report’s comments about lawyers and is reviewing last year’s Supreme Court ruling to see what could be done within the law to address concerns…”

–‘Canada Moneylaundering’,
Bay Street Ex


Sarawak Governor Tun Abdul Taib Mahmud (Photo: EPA via The Malaysian Insight)

‘How A Corrupt Malaysian Officials’ Family Acquired $200 Million In Ontario Real Estate’

“An Ottawa-based real estate company, ‘Sakto Group’, linked to Malaysia’s Tun Abdul Taib Mahmud, has been accused of money laundering and will face the court in Toronto, Canada.

“BMF {‘Bruno Manser Fund’} said that it has resorted to taking legal action because no public prosecutor has gone after the company for the alleged money laundering.

The {Swiss} NGO said that it has “repeatedly alerted” Canadian authorities on the suspected flow of corrupt money since 2010. It has even published an 85-page research report (‘Safe Haven Canada’),
which identified numerous money-laundering red flags in connection with {Malaysian politician} Sakto’s business activities in Canada in February 2017.

However, no action has been taken by the law enforcement agencies against Sakto and the Taib family.

BMF has subsequently decided to envisage private prosecution of the Taib family in Ontario. The use of a private prosecution in a grand corruption case is a novel case for which no precedent can be found,” it said.

“Experienced fraud lawyers Lincoln Caylor and Maureen Ward of Canadian law firm, ‘Bennett Jones LLP’, have been hired to represent BMF…

“The case was filed by Swiss NGO, the ‘Bruno Manser Fund’ (BMF) against some of Canada’s biggest financial firms — ‘Royal Bank of Canada’, ‘Toronto-Dominion Bank’, ‘Manulife Financial Corporation’ and ‘Deloitte & Touche’ — to obtain financial records. It is seeking to get information on how money flowed “from Malaysia into the Taibs’ Canadian real estate group” to see if there are grounds for a criminal case against the company…”

–‘Sarawak Governor Taib Mahmud And His Family Are Accused Of Money Laundering In Canada’,
Tang Ruxyn, Says, 22 Sept. 2017


“On May 26, a West Vancouver lawyer was found guilty of professional misconduct by a Law Society of B.C. disciplinary panel for allowing $26 million from unknown sources to flow through his trust account.

The panel found the lawyer ignored “a sea of red flags” and never asked the source of funds or where they were deployed. He admitted there was “risk involved”, so he charged a tenth of one per cent of the amount, but did no legal work for the client.

This is how “money laundering” or “terrorist financing” can be easily accomplished in Canada. Lawyer’s trust accounts can be used to bypass the legal scrutiny of banks and of regulators, tax officials, or law enforcement agencies.

“In Australia and Britain, lawyers cannot do this. But in Canada, this is a gigantic loophole and is the reason why Canada recently received a failing mark from the world’s watchdog into money laundering and terrorist financing — the ‘Financial Action Task Force’ (FATF) launched by the G7 and ‘United Nations’…

“Another major shortcoming cited was that Canada’s regulator who monitors flows of “suspicious” money into the country — FINTRAC (‘Financial Transactions and Analysis Center of Canada’) — can only perform half the job. It reports unusual or suspicious amounts to law enforcement agencies, but cannot request additional information from reporting entities.

“The result of this shortcoming is that Canadian police are increasingly being inundated with reports from FINTRAC about questionable flows of cash, or asset purchases, said a high-ranking police official, but are unable to do anything

“The result is there are few prosecutions, weak sentences, and few confiscations, said FATF. It added that the ‘Canada Revenue Agency’ should also be routinely auditing charities for illicit capital flows, but does not.

“Ironically, Canada led the world about 10 years ago by proposing legislation that required lawyers to do what banks and accountants must do.

“But the same ‘Law Society of B.C.’ that disciplined the lawyer in May, successfully fought proposals through the court system for years.

“On Feb. 13, 2015, the Supreme Court of Canada found the wording of the legislation breached the constitutional right to attorney-client privilege

“It also seems unjust that the attorney-client privilege prevents lawyers from helping uphold laws, but not other professionals. Accountants, doctors, nurses, social workers or teachers are legally obligated to report abuse or criminality under the law.

Requirements are inoperative toward legal counsels, legal firms and Quebec notaries,” said the FATF report. “In light of these professionals’ key gatekeeper role, in particular in high-risk sectors and activities such as real-estate transactions and the formation of corporations and trusts, this constitutes a serious impediment to Canada’s efforts to fight money laundering (or terrorist financing).”

Lawyers are able to deposit cash from unknown sources in their trust accounts then disperse these. They also provide anonymity through the creation of legal structures, nominees, trusts, or shell companies. The result is that Canada has become a secrecy haven, and a leaky one at that.

“As long as anonymity is protected in Canada — a separate law enforcement problem — Canadians will not know where or who money is coming from, which is why provincial taxes on foreign buyers are useless in stopping the overheated real estate frenzy.

“As recommended in the report, real estate agents, brokers, and developers should also face tighter government regulation.

“Bringing the legal and real estate sectors to heel, banning anonymity and shell companies, giving FINTRAC more powers, and imposing a reverse-onus on foreigners bringing in scads of money would go a long way to ending the shady practices that have gone on for too long.”

–‘Legal loopholes give Canada a bad name when it comes to money laundering’,
Diane Francis, Financial Post, July 14, 2017

For other aspects of money laundering in Canada, see:

‘Millions in suspected Russian crime proceeds flowed through Canadian banks, companies’ (May, 2015)

‘Canadian bank failed to report 1,200 suspicious transactions’ (2016)

‘Crime group allegedly laundered millions through B.C. casinos’ (June, 2017)

‘B.C. government officially launches casino money laundering investigation’ (Sept. 2017)

‘Will B.C. casinos’ bad record on money laundering get worse at B.C. Place casino?’ (2011)


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