Monday, December 12, 2016

Vancouver Real Estate: Hotbed Of Chinese Money Laundering?

Vancouver real estate: hotbed of Chinese money laundering?

Vancouver Real Estate: Hotbed Of Chinese Money Laundering?

Reports that Vancouver is a major destination for illegal money from China seem a little exaggerated. A Vancouver paper, The Province, reports that Vancouver International Airport is the “major port of entry” for the money, which is then laundered through the real estate market. The paper says that documents from the Canada Border Service Agency (CSBA) show that approximately $15 million in “illicit” money was seized by agents from Chinese citizens at the Vancouver and Toronto airports over a period of about eighteen months between June 2012 and December 2014. Of that, $10 million was taken at Vancouver airport.
In the year 2012, $249.57 billion in illicit money was transferred abroad from China, according to a US agency that fights global money laundering. Global Financial Integrity further reported that Chinese nationals have illegally transferred $1.25 trillion out of China in the past ten years. How can $10 million be considered a “major” part of such vast sums?
International travelers entering Canada are required by law to report cash or monetary instruments like bank drafts or bonds with a value over $10,000. Canadian border officials are reportedly lenient, however, and “almost always” return undeclared assets to their owners for a small fine. In the US, by contrast, fines are typically much higher, and the assets are seized. This Canadian border laxity accounts for Vancouver’s popularity as a destination, according to media reports. But the comparatively tiny amount of $10 million from a global Chinese outflow of $250 billion in 2012 alone hardly seems to indicate a “major” money laundering problem.
Vancouver Sun writer noted that there is little evidence the city’s real estate market is “awash” in offshore, i.e. Chinese, laundered money. Where are the arrests and court cases, he wonders? Why have there been no press releases announcing a successful prosecution?
The real estate business has been characterized as lax in enforcing federal rules that are in place to catch money launderers. The Financial Transactions and Reports Analysis Centre, or Fintrac, is the federal body that investigates allegations of money laundering. Real estate agents and brokerages are required to report any suspicious transactions or cash transactions over $10,000. There are stiff penalties for not reporting these. But a spokesperson for the real estate industry in British Columbia, Scott Russell, denied that realtors were non-compliant. He insisted that all agents filled out Fintrac reports, in some cases on every transaction, afraid of being caught out by Fintrac and fined. Many brokerages do not even accept cash.
So the claim that Vancouver is a big-time money laundering centre is, so far, unproven. Only one money laundering case involving a Chinese national operating in Vancouver has been exposed, according to the Vancouver Sun. That case involved a man who allegedly embezzled $50 million from the Chinese government and fled to the US. He allegedly used some of the money to purchase real estate in BC, paying cash.
This doesn’t mean money laundering and other illegal activities aren’t going on. One source told The Province that the money seized at the airport represents only a tiny fraction of the illicit money actually pouring in from China. Reports of corrupt Chinese officials paying cash for high-priced Vancouver real estate without caring how much if costs are common. But are they true? The Vancouver Sun says the issue of laundered money remains, as always, “unaired, hidden behind the premise of national security and open to conjecture, anecdote and the prejudices of the ignorant.”

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