Canada is too friendly to shady real estate purchases – report

Canada needs to do a better job cracking down on shady foreign investors, many of whom may be laundering ill-gotten cash through real estate purchases. That’s according to a new report by Transparency International, a Berlin-based watchdog group.

Lax standards in Canada, as well as countries like the U.S. and China, make it easy for billions of dollars of shady money to pour into cities like Vancouver, according to the Vancouver Sun.

Former Prime Minister Stephen Harper promised to toughen regulations at various G20 summits, but right now finance rules are lax enough that it’s hard to determine whether foreign “money launderers and other corporate kleptocrats” are snatching up properties in Toronto and Vancouver, Transparency International Canada President Peter Dent told the Sun.

“Right now we don’t have a mechanism in place to actually test the veracity of those claims,” he said.

According to the Sun, n 2014 Harper and other G20 leaders adopted principals meant to ensure that wealthy people couldn’t hide their money through shady investments. However, “Canada does not fully comply with any of the G20 principals,” the Transparency International report stated. In fact, Canada’s framework for controlling such shady foreign investments ranked below Mexico, Indonesia and Saudi Arabia.

The lax framework makes it “incredibly difficult to stop a corrupt politician from buying a luxury mansion with money stolen from public coffers,” according to the report.

The report comes on the heels of numerous allegations from people like former ambassador David Mulroney that “hot” foreign money is pushing Vancouver housing prices into the stratosphere, according to the Sun. And a recent report by researcher Andy Yan found that in some high-end Vancouver neighbourhoods, two thirds of new homes may have been purchased by Chinese nationals. And although the average price of those homes was more than $3 million, about 32% listed the owner’s occupation as “homemaker,” while another 4% were students.

Vancouver immigration lawyer Richard Kurland told the Sun he supported the report’s recommendation for tougher rules.

“This is about ‘following the money,’” he said. “Canadians should be grabbing the moral high ground, and the report shows we can do better.”

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  • by MFenn 2015-11-16 4:24:32 PM

    Well, of course the authorities should be against money laundering. But it's also easy to predicate 'shady' (to use a word in the article) which laundering indeed is, upon 'foreigners', with the result that bureaucratic measures which drive away investment are advanced with an almost paranoid mindset supposedly because of 'shady foreigners'. It almost sounds like George Orwell's caricature of the British Empire, whereby foreigners were 'sinister, treacherous' compared with the 'pure' British Imperialists. Or like Somerset Maugham's caricature of investors on the French Riviera: 'sunny place, shady people'. Such rhetoric or implied nuances have no place in serious investment forums. Especially when when the aim is to attract investors rather than drive them away.

  • by E.T. 2015-11-16 11:06:59 PM

    MFenn....When the government auditors finally follow the dirty money trail and it leads them abroad, will you overcome your fear of calling a spade, a spade, and stop being an apologist who's afraid to say something that may offend someone?

    I keep hearing from real estate agents that there is no foreign ownership problem. Funny though; when I ask them to show me the statistcal evidence that the foreign ownership levels are as low as they claim, they then acknowledge that there is no data. What kind of b.s. argument is that.

    Show me the evidence its not and I'll retract my words. Until then, keep telling your kids they got no chance of owning a home near any market where the good jobs are.

    Everyone knows whats going on here. Even newcomers from foreign lands who might otherwise have a chance to own a home.

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