Diane Francis: Trudeau’s housing plan won’t stop money laundering from fueling out of control prices

0

The Liberals allowed fortunes to be made by those who facilitate these massive financial flows that have hurt all Canadians

Content of the article

During the election campaign, Prime Minister Justin Trudeau announced ways to clean up real estate practices to reduce sky-high housing costs in Canada. But in power since 2015, he has done little to tackle the underlying loopholes that have facilitated massive money laundering for years, contributing to price inflation.

Advertising

Content of the article

Polls show that at least a third of Canadians believe the lack of affordable housing is a major electoral issue and they are right. Extremely high real estate prices have hurt the middle class and made Canadians among the most indebted consumers in the world, mainly due to high mortgages.

Last month a dazzling report came out highlighting Ottawa’s failure. Entitled “Acres of Money Laundering”, it was published by Global Financial Integrity (GFI) in Washington DC, the world’s largest think tank on illicit financial flows, corruption, illicit trade and money laundering. He’s looking at 35 cases in Canada, the tip of the iceberg.

In the background, I have written dozens of articles on “washing the snow” or the flow of billions of dollars of dirty money into Canadian real estate. Ottawa ignored these recommendations as well as recommendations made by GIF and the Financial Action Task Force (FATF), such as requiring lawyers, real estate professionals, mortgage brokers or notaries to alert authorities in cases of suspicious buyers, lenders, borrowers or transactions. Canada, with the exception of British Columbia, has also not required that beneficial owners of real estate assets be publicly disclosed. It wasn’t until the last budget that a registry was announced, but it was incomplete and postponed, strangely, until about next year.

Advertising

Content of the article

GIF’s report analyzed 35 cases involving US $ 626.3 million in laundered funds over five years. (A 2019 RCMP report estimated that C $ 46.7 billion was laundered in Canada in 2018 alone.)

“The money laundered came from drug trafficking in 58.5% of cases. The main foreign origins were China (22.85%), the United States (11.4%), the Republic of Congo (8.5%) and the rest distributed between Chad, Mexico, Colombia, Malaysia, Russia and Libya, ”the report says. “The facilitators were: 22.8 percent of the lawyers; 14.2% real estate agents; 11.4% of real estate development companies and the rest scattered among financial institutions, cryptocurrency companies, property managers, accountants and mortgage brokers. “

Advertising

Content of the article

Some 88 percent of purchases were residential, 20 percent commercial and, unique in Canada, five percent farmland.

The money laundering “typologies” included 51.4% of anonymous business structures; 45.7% third-party accessories; 34.2 percent mortgage programs; 17.1 percent from private loans; 5.7 percent renovations; and 5.7 percent of leasing programs. Some have also used the immigrant investor program or overvaluing real estate programs (overpaying to reimburse the seller tax-free), according to the report.

Instead of cracking down on scams by immigration professionals or investors, Trudeau announces that he will ban blind bids, preventing buyers from seeing other people’s bids to “crack down on predatory speculators.” He also threatened to ban foreign buyers for two years, which will be unnecessary given that Canada is a secrecy haven, thanks to its legal, financial and real estate professionals. Both ideas are unnecessary.

Advertising

Content of the article

  1. Prime Minister Justin Trudeau attends a press conference following a tree planting during an election campaign visit to Plainfield, Ont., October 6, 2019.

    Diane Francis: Trudeau’s promise to plant 2 billion trees just for greenwashing

  2. Nothing

    Diane Francis: Justin Trudeau’s disappointing COVID-19 record

  3. Conservative Leader Erin O'Toole waves her hand during a speech in Quebec City.

    Diane Francis: Erin O’Toole’s platform proves he’s ready to rule unlike the child Trudeau

  4. Diane Francis: The result of the Canadian government's inaction on money laundering has been the growth of a gigantic underground economy, which exacerbates corruption and economic disparities around the world.

    Diane Francis: The United States is finally doing something about the global scourge of money laundering. Are we going?

The GIF report estimated that in 2020 alone, between $ 32.8 billion and $ 82 billion was laundered across Canada. The skylines of Vancouver and Toronto are built to house laundered money.

Letting lawyers fend for themselves is the biggest mistake because they are at the heart of most schemes and transactions. They set up schemes through limited companies, real estate funds or offshore vehicles to hide their clients and then hide behind client privacy rules. And their escrow accounts are often used to transfer dirty money or cash.

Unaware of all this, the Liberals let those who facilitate these massive financial flows that have hurt all Canadians a fortune.

Read and subscribe to Diane’s America newsletter at dianefrancis.substack.com

Advertising

In-depth reporting on The Logic’s innovation economy, presented in partnership with the Financial Post.

comments

Postmedia is committed to maintaining a lively but civil discussion forum and encourages all readers to share their views on our articles. Comments may take up to an hour of moderation before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread that you follow, or if a user that you follow comments. Check out our community guidelines for more information and details on how to adjust your email settings.


Source link

Share.

About Author

Leave A Reply