“The amount of money being laundered in B.C. is more than anyone predicted,” Finance Minister Carole James told reporters Thursday.
In real estate alone, an estimated C$5 billion may have been laundered last year in the province -- equivalent to 4.6% of all transactions by value in that period, according to one of the reports. In the Vancouver region, where housing prices rose more than 70% in five years, “I certainly believe that money laundering played a part,” James said.
Such a share of transactions is “sufficiently large to have an observable impact on real estate prices,” the report said. It estimated that dirty money pushed B.C. home prices 3.7% to 7.5% higher than they would be in the absence of laundering.
We make no attempt, nor have we been asked to quantify these money streams, although
many estimates are already in the public domain. What is clear is that the total sum is large and
to ask if it has impacted housing prices in certain communities of the Lower Mainland is really a
rhetorical question. Of course, it has. As we demonstrate in this Report, the infusion of money
into the B.C. economy from abroad led to a frenzy of buying, which in turn raised the assessed
value of homes in large swaths of Greater Vancouver.
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 $28
billion in residential property in B.C., 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. Requiring beneficial owners to be identified for all
properties (including those held through nominees) would make money laundering in B.C. a
much less desirable business.