According to 2 recent government reports, more than $5B in dirty international money was laundered in the picturesque province of British Columbia last year.
Over the past few years, the rapid appearance of high-rolling casinos, luxury real estate developments, and luxury car dealerships in the westernmost province of Canada seemed too good to be true.
Turns out, it was.
A housing bubble built on dirty laundry
Money laundering in BC took many forms, ranging from hockey bags stuffed full of cash to shady luxury car exports.
But real estate was by far the dirtiest type of laundry. According to the research, 1 in 5 houses purchased in British Columbia is bought in cash — enough to bring in $151B over the past 2 decades.
But the even crazier conundrum is that $20B worth of that money belongs to holding companies whose true owners remain secret.
How did this happen?
In BC, mortgage brokers, private lenders, and lawyers aren’t required to report transactions to Canada’s financial watchdog, FINTrac, opening up a massive loophole for anonymous foreign investors who want to dump their cash in valuable properties with no questions asked.
Across BC, hundreds of mortgages have been registered and repaid in rapid succession — a telltale sign of money laundering. In one case, a single house had 29 separate mortgages.
According to the report, most of these investments were used to “snow wash” dirty money that originated with Mexican cartels, Iranian gangs, and Chinese organized crime syndicates.
Vancouver is a town turned upside down
Housing prices there have risen 70% in the past 5 years. The local real estate market is so screwed up that college kids are moving into empty mansions and saving the foreign investors/money launderers who own them money on vacancy taxes.
Based on the report, British Columbia’s government plans to establish a public registry to cut down on anonymous real estate purchases and revamp regulations in order to monitor financial activity more closely.