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B.C. can still fix flawed anti-money laundering laws: CD Howe

by Neil Sharma on 12 Nov 2020

British Columbia’s highly anticipated measures to combat rampant money laundering in the province’s real estate have been rendered toothless by the very government that designed them, charges the C.D. Howe Institute in a new report.

After the province was rocked by two bombshell reports revealing that $5 billion was laundered through its property market in 2018, causing prices to spike 5%, the province boasted of its curtailment efforts, including implementing a vigorous beneficial ownership registry. But that, says the institute’s report, B.C.’s Public Registry to Combat Money Laundering: Broken on Arrival, has been attenuated and won’t thwart criminals from washing dirty money in B.C.’s housing market.

“The final product, scheduled to be launched this fall, will likely do little to stop money laundering in B.C. real estate,” Kevin Comeau wrote in the report “There is no proactive verification of identification information for beneficial owners, which renders that information of little value to law-enforcement agencies and other searchers of the registry. The searchability and discoverability of information filed on the registry is unreasonably restricted, which deters use and limits searchers’ ability to connect falsely declared beneficial owners with perpetrators of predicate crimes.”

In addition to omitting a “confidential tip line through which searchers from around the world can send key information and evidence to Canadian law-enforcement agencies and Canada Revenue Agency,” anybody found guilty of false filings wouldn’t be prosecuted with jail time, which Comeau’s report asserts won’t dissuade criminals, nor will it give law enforcement leverage to offer plea deals in exchange for predicate offence perpetrators.

“In other words, the information on the registry will be unreliable, difficult to access, difficult to process and, even if it helps a searcher spot a falsely declared beneficial owner, the ability to communicate that discovery to Canadian law-enforcement officials and their ability to leverage it to catch criminals will be curtailed.”

Nevertheless, Comeau’s report is replete with recommendations to make B.C.’s Land Ownership Transparency Act (LOTA) the most powerful registry in the world, beginning with the implementation of a verification system, which includes a well-funded authentication agency, and requiring government-issued identification, like a passport and driver’s license, for proof of identity. Although Comeau admits that such an agency would cost millions per annum to operate, it would net offsetting revenues, to say nothing of the societal benefits both domestically and internationally.

As punishment, the report recommends either up to five years in prison or fines not greater than either $5 million or the value of the property, or both, which would give law-enforcement leverage over frontmen with plea deals.

“Sanctions that include prison sentences and larger fines will have five benefits. They will… change the risk/reward dynamic of laundering money in B.C. real estate—no longer will the cost of doing business be limited to fines.”

Another one of the report’s recommendations is to use unique identifiers, like sequential numbers, because some languages don’t lend themselves to easy translation into Latin script, and that allows a bad actor to identify themselves with several names. By disclosing names in their alphabet script, searchers in other countries, such as China and Russia, will also be able to easily search for persons of interest.

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