Vancouver’s one-two punch is expensive homes and low wages
British Columbia plans to crack down on dirty money flowing through real estate, the latest move by the government to bring more transparency to Canada’s most expensive property market.
Attorney General David Eby said that his office is launching an independent review into potential money laundering in real estate, horse-racing and luxury car sales. The review comes in response to recommendations from a previous review into money laundering in the province’s casinos. In addition, Finance Minister Carole James has appointed an expert panel to look directly at money laundering in the housing sector. Both probes will be done by March.
“There is good reason to believe the bulk of the cash we saw in casinos is a fraction of the cash generated through illicit activities that may be circulating in British Columbia’s economy,” Eby told reporters Thursday in the capital of Victoria. “We cannot ignore red flags that came out of the casino reviews of connections between individuals bringing bulk cash to casinos, and our real estate market.”
Premier John Horgan’s New Democratic Party-led government, since taking power last year, has been spearheading an anti-money laundering drive after finding that casinos in the Vancouver area served for years as "laundromats" for domestic and international crime organizations. The government had pledged in June to conduct a second inquiry to examine links between money laundering and real estate.
The investigations launched by the attorney general’s office and ministry of finance will look at the scale and patterns of real estate activity with potentially fraudulent transactions and provide recommendations on preventing market manipulation and improving standards in financial service regulations.
“I have great confidence that findings from the probe we are launching today will give a great picture on how criminals are profiting from our system and how we can do our best to eradicate money laundering,” Eby said.
The crackdown comes amid public outrage at the region’s growing unaffordability and the belief that outside capital has stoked the run up in home prices which have more than doubled in the past decade. In Vancouver, the typical single family house costs more than C$1.5 million ($1.15 million), nearly 20 times median household income, making the city the most unaffordable market in North America.
The government has also sought to bring more transparency to the murky property market after a study by Transparency International found that it’s not possible to identify who owns nearly half of Vancouver’s most expensive properties. This month, the province began demanding more information about beneficial property ownership in tax forms. The province plans to make the information available in a public registry and share it with tax authorities and law enforcement agencies.
“Our goal is simple, as you’ve heard: Get dirty money out of our housing market,” James said. “When the real estate market is vulnerable to illicit activity and unethical behavior, people, our communities and our economies suffer. This is something we have to tackle.”