Second German report finds money laundering in B.C. luxury car market (

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Highlights of Peter German’s report findings

In September 2018, Peter German was asked to examine potential money laundering in the real estate, luxury car and horse racing sectors. Government has released sections of German’s report pertaining to luxury cars and horse racing.  

German’s review found that, “organized crime figures are unhindered in their ability to launder the proceeds of crime through high-end, luxury vehicle purchases within Greater Vancouver,” (p. 22).

German examined several areas of involvement of organized crime in luxury cars: 

  • the use of vehicle purchases to launder money in B.C., including luxury car resellers and lease companies;
  • Grey market vehicle exports, a form of trade-based money laundering;
  • the export of stolen luxury vehicles for profit; and
  • the use of luxury vehicles as crime vehicles to facilitate other organized criminal activities.

German’s findings on luxury cars include:

There are few barriers to laundering the proceeds of crime through luxury vehicle purchases within Greater Vancouver (Chapter 3-3)

  • Some vehicle dealers have accepted large sums of cash from suspicious individuals with unknown sources of income, to pay for luxury vehicles.
  • Dealers and luxury car resellers are not required to report large cash or suspicious transactions to authorities such as FinTRAC and don’t have to require proof of source of funds from prospective customers.
  • There is no barrier to dealers accepting the total amount of a vehicle purchase in cash, by bank draft, by overseas wire or on a credit card.

Organized crime is potentially receiving tax rebates for trade-based money laundering (Chapter 3-4)

  • Organizations are moving laundered proceeds of crime across borders by exporting grey market luxury vehicles – a well-known form of “trade-based” money laundering.
  • The Province has seen a dramatic increase in the uptake in the provincial sales tax (PST) rebate program for vehicles destined for sale abroad.
  • Before 2014, fewer than 100 vehicles a year received the refund. In 2016, the PST was rebated on 3,674 vehicles.
  • In 2016, a single “straw buyer” made 29 purchases, 48 straw buyers made between 11 and 29 purchases and 1,000 straw buyers were linked to one exporter. 
  • Since 2013, government has refunded a total of $85 million in PST that is related to vehicle exports, $83.8 million since 2014 alone.

Organized crime is reportedly exporting stolen luxury vehicles for profit (Chapter 3-1)

  • 24% of luxury vehicles stolen in B.C. are not recovered by police, compared to 18% for all vehicles in B.C. 
  • The difference is believed to be shipped overseas for profit.
  • Criminals are taking advantage of lax enforcement, which allows vehicles to be shipped with little scrutiny, as B.C. ports have no dedicated police presence.
  • Internationally, this type of criminal activity is associated with the financing of terrorism.

German also examined money laundering in B.C.’s horse-racing sector. He found that horse racing is not currently high risk in terms of money laundering, but that it is a vulnerable sector in light of the absence of reporting to FinTRAC, a lack of training for staff and a lack of regulatory and law enforcement oversight (p. 90). In other parts of the world, horse racing has been used to launder the proceeds of crime through cash bets, purchasing race horses, race fixing and insurance fraud.

The full report, including his findings on the real estate sector, will be released soon.