Toronto, December 18
Press Release
A new Transparency International report highlights that Canada’s real estate data is opaque and difficult to access.
The new TI report, Real Estate Data: Shining a light on the corrupt, which comes out today, reviewed real estate data in Australia, Canada, The United Kingdom, and the United States. In Canada the report focuses on British Columbia, Ontario, and Montreal.
TI’s analysis found that in Canada, the availability of real estate ownership data varies widely between provinces. No jurisdiction that was analysed by TI currently has information on the beneficial owners of properties, and all have information behind paywalls.
Money laundering in Canada, or ‘snow washing’ as it has come to be known, through real estate has been a cause of concern across the country. An expert panel commissioned by the BC government estimated in 2019 that $5.3 billion was laundered the previous year through the province’s real estate market - raising housing prices by up to 5 per cent. In a 2016 report, TI Canada found that one-third of the most valuable residential properties in Vancouver were owned through shell companies, while at least 11 per cent have a nominee listed on their title.
In the Greater Toronto Area, TI Canada with coalition partners Publish What You Pay Canada and Canadians for Tax Fairness, found that between 2008 and 2018, $28.4 billon in housing was acquired through corporate entities. Furthermore, at least $25 billion in residential mortgages were provided by unregulated lender with no statutory anti-money laundering reporting obligations. While this activity isn’t illegal, it does raise flags on the need for access to beneficial ownership data.
Finally, a June 2017 investigative report by the Journal de Montréal, Le Monde Afrique and African Arguments revealed nearly $30 million in property in the Montreal area as bought by government officials and politically exposed persons from several West African countries with endemic corruption. This year, the Radio-Canada program Enquête conducted an undercover investigation to show how a nefarious actor can bring questionable funds into Montreal real estate.
Thankfully there is some progress to make Canada’s real estate less enticing to the world’s criminals, kelptocrats, and tax dodgers.
First, the Government of British Columbia took a large step ahead of all jurisdictions in Canada and even the world by adopting the Land Ownership Transparency Act in 2019. While the registry’s data was not available during the publication of TI’s report, real estate data, including beneficial ownership data will be available in April 2021.
Advocates have flagged problems with the B.C. land registry though. First, there is no verification system in place for the registry. Second, while the registry will be accessible to anyone, there is a $5 search fee. Both faults will reduce the registry’s influence in dissuading money launderers, and undermine its effectiveness for authorities, journalists, and civil society to root out those who would still try to game the system.
Another key anti-money laundering advancement coming in 2021 for the real estate sector will be updates to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). In June, real estate agents will be required to include beneficial ownership information as part of their customer due diligence.
Based on the challenges that the real estate sector has faced, and the need for access to data, the Canadian Real Estate Association has endorsed a national publicly accessible registry of corporate beneficial ownership. The Ontario Real Estate Association also advocated for Ontario to adopt a beneficial ownership land registry.
Canada’s real estate has been under intense scrutiny by international organisations like the Financial Action Task Force who cited the sector as a money laundering vulnerability in a 2016 peer review. Many Canadians have felt the impact firsthand as real estate prices have soared in cities like Toronto and Vancouver, and new condos sit empty, suspected of being safety deposit boxes in the sky for the global corrupt.
The B.C. land registry, despite its flaws, and the amendments to the PCMLTFA are welcome and needed steps, as are recent announcements by the RCMP to hire more AML personnel. More jurisdictions need to heed the recommendations of the TI report and build on B.C.’s lead by making real estate data as open and accessible as possible to help end snow washing.
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For media inquiries, please contact:
James Cohen, Executive Director, TI Canada
Phone: 416-488-3939