Laundering Money In Canadian Housing: Report

Loopholes in Canadian law are allowing a “corrupt elite” to use the housing market for money-laundering, says a new report from Transparency International (TI).

clip_image002The report found 10 problem areas with the laws related to real estate transactions in Canada, Australia, the U.K. and the U.S. — four countries it identifies as being hot-spots for real estate-related money laundering.

Canada’s legal framework has severe deficiencies under four of the 10 identified areas.

In the other six, there are either significant loopholes that increase risks of money laundering through the real estate sector or severe problems in implementation and enforcement of the law.

While anti-money laundering provisions cover real estate agents, brokers and developers, notaries from British Columbia and accountants, they do not cover other professions such as lawyers, law firms and Quebec notaries. Given their roles in real estate closings, this is a major loophole. Real estate professionals are not required to identify the beneficial owners of customers when conducting due diligence. Transparency International Canada’s analysis of land title records found that nearly a half of the 100 most valuable residential properties in Greater Vancouver are held through structures that hide their beneficial owners. Nearly one-third of the properties are owned through shell companies, while at least 11 per cent have a nominee listed on title.