VANCOUVER • Vancouver penthouses, ski chalets at Whistler, and holiday retreats in the Gulf Islands are among the thousands of properties identified in a dirty money probe that estimates more than C$7 billion (S$7 billion) was laundered through the western Canadian province of British Columbia last year.
The startling findings from two reports released by the provincial government on Thursday illustrate how a torrent of suspicious cash has fuelled casinos, luxury car sales and real estate in the Pacific Coast region.
"The amount of money being laundered in B.C. is more than anyone predicted," Finance Minister Carole James told reporters on Thursday.
In real estate alone, an estimated C$5 billion may have been laundered last year in the province - equivalent to 4.6 per cent of all transactions by value in that period, according to one of the reports.
In the Vancouver region, where housing prices rose more than 70 per cent in five years, "I certainly believe that money laundering played a part", Ms James said.
Such a share of transactions is "sufficiently large to have an observable impact on real estate prices", the report said.
ROLE OF VANCOUVER
Greater Vancouver has acted as a laundromat for foreign organised crime, including a Mexican cartel, Iranian and mainland Chinese organised crime... The region has acquired an unenviable reputation for serving as a site for money laundering, drug trafficking, and capital flight.
A REPORT LED BY INDEPENDENT INVESTIGATOR PETER GERMAN
It estimated that dirty money pushed British Columbia home prices 3.7 per cent to 7.5 per cent higher than they would be in the absence of laundering.
A string of investigations commissioned by provincial Premier John Horgan's government have slowly been revealing in recent months how Vancouver and the surrounding area has become a hub for dirty money, tax evasion, and a place to park foreign cash of unknown origin - no questions asked.
Previous reports had revealed how casinos for years were accepting millions in cash often stuffed into hockey bags and suitcases, how gangsters paid car leases with proceeds of crime, and most recently, how a thriving grey market in Vancouver-to-China luxury car exports sent millions of dollars in sales-tax refunds to overseas buyers.
But those pale in scale and scope to the latest findings in real estate, a sector that by some estimates accounts for a third of British Columbia's gross domestic product and is likened to "the oil" of its economy.
Among the numbers revealed in the second report released on Thursday, led by independent investigator Peter German, who had earlier probed the casinos, were:
One out of five B.C. properties are bought in cash; over the past two decades, C$212 billion in property has been bought in cash.
The true owners cannot be identified for the vast majority of C$28 billion in B.C. residential property held by legal entities.
More than 25 properties worth C$34 million have owners listing addresses in countries subject to trade sanctions.
The anecdotal examples are just as staggering:
• A C$3.5 million Gulf Island estate acquired with funds allegedly embezzled from a US$90 million (S$123 milion) loan fraud in India.
• A luxury car reseller "known to police" who owns three Vancouver homes worth C$8.6 million with multiple layers of mortgages with inexplicably declining interest rates.
• Hundreds of properties where mortgages were registered and repaid in rapid succession - in one case a single property had 29 mortgages - which the report called a "red flag for money laundering".
• A student with a registered office at a rented unit who bought 15 units in the same condo for C$29 million.
While public scrutiny until now has focused on the role of Chinese money - both legal and illicit - particularly in the Vancouver area, the latest investigation shows the region has been open to all.
"Greater Vancouver has acted as a laundromat for foreign organised crime, including a Mexican cartel, Iranian and mainland Chinese organised crime," the German report said.
"The region has acquired an unenviable reputation for serving as a site for money laundering, drug trafficking and capital flight.
The provincial government is planning to establish a public registry of beneficial property owners by next year that it says will peel back the anonymity that enables such activity.
It is also continuing to plead with the federal government for more resources and new regulations to better monitor cash transactions and suspicious activity, Attorney-General David Eby said.
"The party is over," Mr Eby told reporters on Thursday. "It may be spring but winter is finally coming for those who rely on bulk cash transactions in their business model."