In the wake of former high-ranking Mountie Peter German’s damning independent report on money laundering in B.C. casinos, attention is now shifting to possible illegal flows of money in the real estate industry.
The report highlighted potential money laundering links to both the illegal drug trade and the city’s white-hot housing market, and a Global News investigation identified similar troubling connections in what is known as the “Vancouver model” of transnational crime.
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Attorney General David Eby has tasked German with a second phase of the investigation, looking at the role of organized crime in the real estate sector.
Cameron Muir, chief economist for the BC Real Estate Association, acknowledged that money laundering is a concern, but said he thinks concerns are being overstated when it comes to housing.
“Undoubtedly some of that money would wind up in the real estate market, and certainly not enough to be driving the home prices or enough to be driving the real estate market in general,” Muir said.
Muir argued that the sales volume for B.C. real estate in the last decade represents upwards of $1 trillion in transactions, and that if shady money is being fed in it would represent a tiny fraction of that.
The German report estimated that about $100 million in dirty money had been cleaned in B.C. casinos in the last decade.
“Even if all of that went into the housing market, which is highly doubtful, that is not going to be enough to drive anything,” he said.
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However, despite the BCREA’s assertion that any illegal transactions in the real estate market would not be enough to be driving high prices, the German report is clear that it is a “vulnerable sector” that deserves further investigation.
It points to multiple investigative media reports connecting illegal activity to the sector, and warns that mortgage brokers are not required to report to financial crime regulators, making them potentially vulnerable.
“The RCMP notes that illegal money entering the world of real estate can be hidden through numerous devices; including property registration, management companies, mortgages, double and triple layers of ownership, and beneficial ownership,” the report stated.
No timeline has been set for a second probe into real estate money laundering.