An international anti money-laundering group says Canada faces an “important domestic and foreign” money laundering threat.
A new report by the Paris-based Financial Action Task Force finds “Canada’s open and stable economy and accessible financial system” makes it vulnerable to money laundering, although it found Canada’s six banks “generally apply adequate measures” to mitigate the risk.
The report says there should be more supervision of transactions in the real estate industry, saying the sector is “highly vulnerable” to international money-laundering activities.
Of particular concern are real estate schemes in which a foreign or domestic criminal provides cash to a local buyer, or more sophisticated schemes where loans and mortgages are combined with lawyers’ trust accounts to move money around quietly.
The report says there are examples of Chinese officials laundering money in Vancouver real estate, but there is no extradition treaty with China.
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It found that while there is an MOU with China, the country hasn’t helped B.C., despite the fact it’s a greater risk of seeing the real estate sector “misused” to launder money generated in China.
This week the Canada Revenue Agency said it would crack down on tax cheats in Metro Vancouver’s real estate market.
A report by the Globe and Mail also uncovered the fact Canada’s banks don’t have to verify the income of foreigners if they put down a large enough down payment, with more scrutiny required for domestic borrowers.
The 216-page report also found Canada’s anti-money laundering regime doesn’t cover the legal profession and Quebec notaries, which it defines as a “significant loophole” that raises serious concerns.
It also adds FINTRAC, Canada’s financial intelligence unit, is limited in its scope to investigate suspicious activity.