British Columbia, home to Vancouver’s hot real estate market, has a rampant money laundering problem, and it centers on real estate.
More than $5 billion — C$7 billion — was laundered in the Canadian province, with around $3.7 billion of that — C$5 billion — funneled through real estate, according Bloomberg, citing a provincial government report.
Rampant real estate money laundering may have tipped the scale in a region where housing prices climbed over 70% in five years. Home prices may be inflated 3.7% to 7.5% because of money laundering, Bloomberg reported, citing British Columbia’s Expert Panel on Money Laundering in Real Estate.
One in five British Columbia properties are bought in cash and in the last 20 years, more than $150 billion — C$212 billion — in real estate was purchased in cash, the report showed. The report also revealed that the real owners are unknown for most of C$28 billion in residential property in British Columbia.
With some estimating that real estate represents nearly a third of British Columbia’s gross domestic product, the amount of fraud is alarming, investigators said.
“The amount of money being laundered in B.C. is more than anyone predicted,” said Finance Minister Carole James, during a press conference announcing the findings, according to Bloomberg. James has been leading the charge to crack down on tax evasion.
The investigation is the latest in a string of reports commissioned by British Columbia Premier John Horgan examining money laundering, casino fraud and foreign funds in the province.
In response to the findings, the government plans to create a public registry of beneficial owners and create new regulations to reign in the fraud.
In Miami, which has long acted as a gateway for illicit money laundering — people have been charged with hiding money in luxury South Florida real estate — the FBI recently started a task force there to clamp down on foreign corruption. [Bloomberg] — Georgia Kromrei