Toronto | The New Money-Laundering Hot Spot of Canada

Toronto-Money-Laundering

Toronto

The Money-Laundering Hot Spot of Canada

Drug dealers, the Mafia, Cartels and shady banks/underworld finance typically come to mind when money laundering is brought up, however many would be surprised to here that experts in Canada are warning that the legitimate real estate market (specifically in Toronto) is now the main target for money-laundering as homes reach increasingly historic prices.

First off, what is money laundering?

Money laundering is the act of concealing the transformation of profits from illegal activities & corruption into “legitimate” assets.

Let’s take the example of a drug dealer who wants to turn their illegal earnings into an apparently legitimate income. They can do this through a number of different avenues such as purchasing small businesses, using the illegal funds to operate the business & then take the legitimate business proceeds out for their own use leaving them with “clean” or “laundered” money.

Why is real estate such a big target for money laundering?

Real estate is a prime option for many money launders’ as it is a high-value item that can be bought through corporations or under false names. Once purchased, it becomes increasingly harder for authorities to determine where the funds have come from as a bank or private lender may be involved.

It is also relatively easy to manipulate a purchase price along with mortgage & legal documents if there are several corrupt parties working together (Lawyer, Real Estate Agent & sometimes even the Lender can all be involved)

Why Toronto?

With estimates indicating that there is roughly $5-100 billion laundered in Canada every year, Toronto is a prime target due to the fact it is the economic powerhouse of the country.

With rapidly increasing property prices & lots of new construction, Toronto has become one of the few options left to launder money as cities like Vancouver have taken preventative measures such as enhanced FINTRAC audits of transaction

What is being done to fix it?

Currently all real estate agents must provide a FINTRAC form for any transaction that is completed, however the forms provided aren’t very detailed & everything is self-reported, so if there are agents with loose (or no) morals, it is very unlikely they will report anything anyways.

In 2019, FINTRAC is going to be stepping up its enforcement of compliance through examinations of real estate brokerage’s, action plans, administrative penalties or disclosure of non-compliance to law enforcement.

It’s hard to say if this will be enough to curb money laundering in Toronto but at least it’s a start!

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Rylie C aka the OneWheel Realtor