Finance

Province launches probe into dirty money in real estate

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Finance

Province launches probe into dirty money in real estate

Updated on Sept. 28, 2018

Media Contacts
Media Relations
Ministry of Finance
250 387-1248
Media Relations
Ministry of Attorney General
778 678-1572
(flickr.com)
Media Contacts
Media Relations
Ministry of Finance
250 387-1248
Media Relations
Ministry of Attorney General
778 678-1572

Backgrounders

Ministry of Finance’s terms of reference: Expert Panel on Money Laundering in Real Estate

The Government of British Columbia is committed to tackling speculation, fraud and money laundering in real estate to ensure the housing market works for people.

A fair, secure and affordable real estate market is dependent on government acting to regulate the industry and boldly taking on issues of speculation, fraud and money laundering.

The Minister of Finance has announced the appointment of an independent chair and expert panel to lead a review of systemic money laundering risks in the real estate market.

This review is designed to uncover the nature, and if possible, the extent of money laundering in real estate and make improvements to market manipulation and abuse policies, procedures and practices within the broader real estate industry in British Columbia.

The experts will:

  • Consider B.C.’s existing legislative framework and financial oversight:
    • Identify gaps in B.C. legislation with respect to the impact of foreign investment and money laundering in B.C. real estate;
    • Review the compliance regime, with a focus on integrity of the system and public confidence; and
    • Evaluate work underway or completed by the provincial government that may address some of these systemic challenges.
  • Review best practices adopted by other jurisdictions.
  • Provide recommendations on:
    • Prevention of market manipulation and abuse;
    • Monitoring and reporting on activities of the real estate market and regulators;
    • Aligning federal policy and enforcement with B.C.’s regime; and
    • Improving standards in financial services.

In order to complete this review, the independent panel may meet with any individual or organization that will assist in addressing the areas of review.

The outcome the Province expects from the work of the expert panel is next steps to ensure a world-class standard in the oversight and compliance of anti-money laundering policy in general.

The Minister of Finance is responsible for regulating the province’s financial and real estate sectors (including overseeing the Office of the Superintendent of Real Estate) and representing the Province in negotiations with the federal Minister of Finance, who is responsible for Canada’s anti-money laundering/anti-terrorist financing regime.

Media Contacts
Media Relations
Ministry of Finance
250 387-1248
Part two of Attorney General's money laundering review

The Attorney General is taking action to further investigate money laundering in British Columbia.

Peter German’s first report, Dirty Money, was released in July 2018 and focused on money laundering in Lower Mainland casinos.

Among its 48 recommendations were:

R45 – That the Province undertake research into allegations of organized crime penetration of the real estate industry

R47 – That the Province consider researching the vulnerability of the luxury car sector and the horse racing sector to organized crime

Responding to these recommendations, German will conduct a second review to examine whether there is evidence of money laundering in the real estate, horse racing and luxury car sectors.

The independent review will examine and deliver findings about:           

  • Links between real estate activity and money laundering in B.C. casinos, including the scale and patterns of real estate activity with potentially fraudulent or illegal transactions by casino patrons;
  • Money laundering in the real estate sector connected to criminal enterprises in B.C. or elsewhere, including analysis of the extent of the problem;
  • The use of lawyers’ trust accounts to mask sources of funds in real estate transactions;
  • Money laundering in the construction industry, including abuse of builders’ liens;
  • Any other conduct in which there is an identifiable link between organized crime and real estate transactions in B.C.; and
  • Connections between organized crime and money laundering in the horse racing and luxury car industries.

German will also report on lessons learned from case studies of large-scale international money laundering to highlight elements that could be relevant in British Columbia. He will analyze evidence of real estate bought using the proceeds of illicit activity and evaluate the Province’s ability to identify and seize real estate purchased through money laundering, tax evasion or fraud.

The report will present findings to the Attorney General. The review will be conducted in parallel with the establishment of an expert panel by the Ministry of Finance that will examine gaps in the real estate system that may allow money laundering to occur.

German’s final report is to be complete by March 29, 2019. It will be released to the public after it has been submitted to government.

Media Contacts
Media Relations
Ministry of Attorney General
778 678-1572

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