An expert panel’s report on money laundering in British Columba determined ill-gotten gains contributed to real estate prices spiking 5% in 2018.
Overall, $7.4 billion was laundered in the province last year, $5b of which went through real estate. But the panel, led by former B.C. deputy attorney general Maureen Maloney, determined that money laundering is more prevalent in Alberta, Ontario and the Prairies than it is in Canada’s third-largest province.
“What this report makes clear is this is not an issue simply for B.C.,” Finance Minister Carole James said during a Thursday news conference. “This is an issue for all of Canada. This is an issue for all jurisdictions.”
James added that the B.C. government is prepared to take immediate action.
“They key here is we’re not waiting,” she said, “Yes, we need to work with the other provinces. Yes, we need to work with the federal government.”
How the government will tackle the problem of money laundering remains to be seen, but it isn’t implausible to think that sweeping legislation could be on the horizon. Arguably more arduous than curbing money laundering is the process of restoring confidence in a real estate market that’s grown beyond the reach of most residents, especially in Vancouver.
Robert Mogensen, a broker with The Mortgage Advantage, hopes that the provincial government will be wary of further short-shrifting consumers.
“I think that oversight is a good thing, but I’m not a big fan of government intervention, as far as taxes and regulations on residents go,” he said. “But I’m behind the foreign buyer tax, for instance, and behind more oversight with regards to establishing the source of cash for down payments from offshore buyers.”
Mogensen, furthermore, believes one course of action the government should take is proscribing trust accounts.
“I’ve talk to a lot of people about this over the last few years: The use of trust accounts by lawyers acting on behalf of foreign buyers and buyers in general to buy property and not disclose who the beneficial owner of the property he,” he said. “That kind of regulation is highly necessary to slow down the process of laundering dirty money.”
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
