Residents of Surrey and White Rock who have noticed more and more of their income stream going towards housing now have a pretty clear idea as to why – money laundering.
A pair of bombshell reports released Thursday (May 9) by the provincial government indicate that at least $5 billion was invested in B.C. real estate, for laundering purposes, in 2018 alone. More than $7 billion was laundered last year, the reports estimate, with other money going into luxury cars, gambling, high-end goods and more.
Finance Minister Carole James said that money laundering is estimated to have raised the average price of real estate in B.C. by about five per cent. That seems conservative. The real-estate market was actually in a bit of a downturn through much of 2018, when compared to the previous five years. This is at least partially due to a number of new taxes James brought in to try and slow down the astronomical rise in real-estate prices. Those price increases have put almost all forms of housing out of reach for “average” buyers (in other words, most of us who live and work here). Housing costs have also jumped significantly for renters, and higher rents combined with a very low vacancy rate has, in some cases, led to homelessness. Surrey and White Rock have not been immune to these issues. The price of housing has jumped all over Surrey, and the issue of foreign buyers and vacant luxury homes exists here. It’s just not as obvious as it is in West Vancouver or the west side of Vancouver.
There is significant public pressure for the government to call a public inquiry, and it will likely be put in place soon. However, that isn’t likely to get to the nub of the problem.
The reports make it clear that money laundering is a national issue, not just a B.C. problem. The estimated amount of money laundered across Canada in 2018 was $47 billion. B.C. was not even first on the list. Both federal and provincial agencies are supposed to monitor the flow of money and engage in appropriate enforcement. It is clear they are not even coming close to doing their job.
Canadian law is very weak in terms of cash transactions. Huge cash transactions, in the hundreds of thousands, do not have to be reported, unlike in the U.S. People who frequently cross the border know that you can’t take more than $10,000 in cash across without reporting it.
When there are minimal rules and lax enforcement, unscrupulous people take advantage of loopholes. It is made clear in the reports that money launderers have found some realtors and lawyers who have assisted them in dealing with the huge amounts of cash they need to turn into legitimate assets.
How does this problem get solved? The province is bringing in new legislation, the Land Owner Transparency Act, which will ensure that the beneficial owner of the property is known. Buyers will not be able to hide behind corporations or other shells. This is crucial.
The federal government must take a lead in ensuring that Canada is no longer a safe haven for money laundering. Those who have engaged in this practice need to be tracked down and, if appropriate, be charged and have their assets seized. Much tougher enforcement of existing money-laundering rules and much tougher new rules are needed. It must become a priority.
Frank Bucholtz writes Wednesdays for Peace Arch News, as well as at frankbucholtz.blogspot.ca