Launderer seeks splendour without diminishment

It cannot have escaped your notice that Canada is in a lather about its real estate sector being used for money laundering.  Stories are appearing seemingly every day about some new scheme or other that has been uncovered, thanks in part to the work of Peter German, a lawyer and ex-Mountie who advises the government on all manner of things, including money laundering.  (You may remember that it was he who wrote the report exposing the extent of money laundering through the casino sector in British Columbia back in June 2018.)  His new report – “Dirty Money – Part 2” – looks at laundering through the horse racing, luxury vehicle and real estate sectors.  And it’s scary stuff, particularly when you see that the cause is not just the deviousness and determination of criminals, but also the weakness of the Canadian AML regime: “Opaque ownership structures allow criminals to remain anonymous and provide a veil with which to conceal money laundering activity in real estate.  Of the legal entities that hold C$28 billion [about £16 billion] in residential property in British Columbia, the vast majority are privately owned with no information on who ultimately controls them.  There is no way to accurately identify nominee owners or properties held through unregistered trusts.”  As my Singaporean stepmother would say, aiya lah – why so stupid?

I’m no expert on the Canadian AML set-up – it’s not one of the jurisdictions in which I work – but even a cursory reading of the German report tells me that there are several really quite basic shortcomings that are surprising in a sophisticated jurisdiction:

  • “[There is] the continuing inability of the federal government to address the Supreme Court of Canada’s 2015 decision in the Federation of Law Societies case which essentially exempted the legal profession from financial reporting to FinTRAC [Canada’s FIU].”
  • “Very little attention is being paid to unregistered MSBs by law enforcement and regulators.”
  • “Large and small auction houses routinely transact business in cash. They are also not subject to financial reporting to FinTRAC.”
  • “FinTRAC acknowledges that it does not regulate certain sectors of the economy which are vulnerable to money laundering including motor vehicle dealers, auction houses and boat sellers.”

Against this background we must also put the attractiveness of life in Canada.  As a recent BBC article on the subject puts it: “Canada is a rule of law country that believes in due process and rehabilitation.  A criminal on trial in Canada will be treated much better than they would in the People’s Republic of China, for example.”  This yet another example of AML efforts trailing woefully behind.  In the same way as international organisations position themselves in jurisdictions where tax and regulation are less onerous, criminals perform their own AML arbitrage.  I should imagine they are reading the German report with glee and booking flights to Vancouver as we speak.

(And in case you’re wondering, the motto of British Columbia is Splendor Sine Occasu – Splendour Without Diminishment.)

This entry was posted in AML, Money laundering, Organised crime, Uncategorized and tagged , , , , , , , , , , , . Bookmark the permalink.

1 Response to Launderer seeks splendour without diminishment

  1. And as if by magic… mere hours after the appearance of this blog post, the province of British Columbia has ordered a public enquiry into money laundering:

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