Canadian real estate being bought with illicit cash? No wayyy. A French NGO is alleging that quite a bit of Canadian real estate has been bought with questionable cash. Sherpa, a Paris-based anti-corruption organization, is urging the RCMP to look into 20 high ranking officials from corrupt regimes. All who bought a lot of real estate, with cash from sources that are unclear.
Corrupt Money Has Been Pouring Into Canadian Real Estate For Years
Stop us if you’ve heard this one before. Officials from foreign countries, with corrupt governments, show up with wads of cash. Amounts of money that don’t make sense in contrast to their salary, all to buy Canadian real estate. Not many questions are asked, because we’re not really looking for answers. It’s not like they’re hairdressers or waiters, where the government feels the “need” to audit income. If you’re from Vancouver, this is your daily news. For the rest of the world, welcome to the s**t show that Canada’s immigration and real estate markets have become.
Canadian real estate has become a washing machine for corrupt regimes. Everyone from Al-Saadi Gaddafi, the son of former Libyan dictator Muammar Gaddafi, to “lots of kids of corrupt Chinese officials.” Canada is easy to immigrate to, and up until recently banks would even knowingly help you circumvent your country’s capital controls. The only catch is you need a good reason, like buying a home. It shouldn’t be a big surprise to hear France’s Sherpa allege there are millions of dollars worth of Canadian homes, which are biens mal acquis. The term roughly translates to “ill-gotten gains.” However, it also refers to a wider movement in France, to stomp out foreign corruption. Biens mal aquis is anything, from questionable cash to residency obtained though fraud.
Over $30 Million In Residential Real Estate
Sherpa’s William Bourdain, along with the Quebec-based Coalition Biens Mal Acquis, allege twenty politicians and senior officials of “corrupt regimes in Africa” have been scooping up Quebec property. In a complaint filed to the RCMP, they count more than $30 million in transactions. As pointed out by Le Journal de Montréal, this includes a block of 10 condo units in a single Montreal building, bought by the brother-in-law of Chadian President Idriss Déby.
Bourdain has some questions regarding how they were able to buy these homes. “It is indisputable that the value of these homes and furniture, sometimes of the order of several million dollars, is disproportionate with the wages enjoyed by their owners.,” he claims. “This imbalance necessarily raises the question of the origin of the funds and constitutes reasonable grounds for believing that the assets are the result of illegal acts.”
Permanent Canadian Residents, Eh?
Those accused are from Algeria, Burkina Faso, Chad, Congo-Brazzaville, the Democratic Republic of Congo, Gabon, and Senegal. AFP confirmed that many on the list, have already obtained permanent residency in Canada. In addition to requesting the RCMP look into the evidence provided, Bourdain urges them to look into those that helped with the transactions. This includes the law firms, notaries, and even the banks.
“These people are pursued by several countries in Europe. They are looking for safe places where they can launder their money,” explains anti-corruption activist Raoul Didier Maboundou, a native of Congo-Brazzaville, to the Journal. “Canada is a country where they can do it without a hitch.”
Note: Ready to brush off your high school French skills? The Journal’s Hugo Joncas did an excellent breakdown of the players being called out.
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I’m assuming the only reason they found the properties in Quebec, is because you can search the Quebec property registry. The rest of the country is near impossible, since you have to pay $20/pop to look up who owns each house.
Would be nearly impossible in BC. Even if you did pay for all of them, you would mostly just get anonymous shell companies.
http://vancouversun.com/storyline/nearly-half-of-vancouver-luxury-homes-have-hidden-ownership-report
Not really helpful.
You mean my long lost, unknown uncle in Nigeria, who was constantly sending me emails, asking for help, to transfer a few million out of the country….. was real?
Lol … now that’s funny!
😂😂😂
I ignored mine too. Now both of our uncles are paying huge fees to accomplish the same thing, and we could have been collecting those fees! Mine didn’t even call after arriving to Canada apparently.
hahaha I’m actually laughing out loud
Toronto, Vancouver, Montreal. All places with inventory “shortage,” record sales, and illicit cash pouring in to buy whole blocks worth of homes.
Meanwhile, every dumb ass Boomer is cheering on price increases, thinking the country is becoming more desirable to live in. Many of these people are not legitimate immigrants. You think they’re leaving behind well paying jobs and prestige, for a bungalow in the suburbs? They’re doing it because they can’t show off the money that’s been stolen.
I have seen this first hand when I put a large multiplex on the market recently. CRA and the RCMP really need to start taclking this instead of focusing on low hanging fruit like wait staff and their tips.
As an agent, you can’t even really do anything about it either. The representing agent is suppose to notify authorities if they think their buyer is doing something dodgy. They never do, because they drummed up the dodgy client in the first place.
The selling agent, if they deny the sale, is perceived as “irrational” by the industry if they have reservations.
Banning foreign ownership should be a top priority for the whole country. Corrupt governments will always find a loophole, we need to find out how to eliminate this from ever happening. We also need a major overhaul to immigration. The Liberals are basically importing votes at this point.
We’re talking about wealthy dictators, corrupt oligarchs, and rapacious one-percenters
using Canada as a piggy bank.
Hardly your left of centre tax and spend crowd, wouldn’t you think?
Regardless, if they are imported “voters”, then their properties would not
be considered foreign ownership.
Unfortunately this will not stop. I can tell you that. Not just Africa…Middle East…South Asia…China….latin America list goes on and on…top of that our Canadian dollar is going down value because of interste rate not increasing because of nafta meaning all these people will even invest more now with a huge discount…and people who are immigrant back ground will bring there money from there back home too and buy here with discount…
Sure with a lower Canadian dollar it is a discount for those with foreign currency who wish to buy today. I could also get a discount as a Canadian, paying in Canadian. A 100-200k “discount” based off of last years prices. I cashed out last april and i could buy back in today but I am choosing to wait for some sort of stability before i back in…..Probably 3-4 years. I dont want to catch a falling knife…… WIll foreigners now look to Toronto and Vancouver as very discounted and a great buy? Maybe. But unfortunately, those foreigners that already purchased are not excited about the fall of the Canadian dollar. Their investment would sell for the same in Canadian (well 100-200 k less if they bought this time last year) however would be worth a lot less if they wanted to convert the funds back. Now if I was a foreign buyer, or a money launderer, I would be worried about “protecting” my money in Canada considering housing prices have been falling, international groups have been calling us out for having one of the largest bubbles in the world, and maybe our currency is going to tank. There are other advanced economies where you can launder your money. It does not have to be in Cananda, especially if you care about value protection. Also, even if Canada were the only developed country to wash your funds……. Why invest in Toronto on Vancouver right now. Go to Montreal, Ottawa, Halifax, etc………… Toronto and Vancouver will burn
You missing the point…it’s not about Toronto or Vancouver it’s about corrupted people hiding money here…these people don’t care as long as they get the money out as fast as possible from there own country and buy real estate in Canada…now where they will buy it’s upto them but normally they go to big cities…same in uk they don’t buy in Birmingham they always go to London no matter how expensive it is…those who choose Canada will do same and it will keep happening whether we like it or not unless we ban it but liberal or conservative will not do it. And yes Canada does have one the most liberal immigration policy hence people buy here cause they can send there family here later…when you have millions in corrupted money you will do anything to hide it…
So if all the care about is getting their money out, why would a currency discount make any difference to their purchasing volume?
If it did, why would they all have been pilling predominately into Toronto and Vancouver, when they could have bought two properties in another Canadian city for the same price?
Do they care about price and wealth preservation or do they only care about getting their money out of the home country and into ours?
Furthermore, banks making it harder for them to borrow here, new rules in BC intended to identify true buyer, general public awareness growing to the issue……… I think snow washing is coming to an end.
If you really think it’s going to end and our banks will do anything to lower there profit then I don’t know what to tell you. Again it’s a trend most corrupt money goes to London newyork Sydney Paris even they are expensive as hell. And lot of them don’t even go for mortgage when they buy with corrupt money. How many of corrupt people bought real estate at Ottawa? Most goes to Vancouver followed by tornoto…prices in those places were always higher but still money keep flowing…it won’t stop unless we ban it completely.
So what difference would a relative currency discount make for these individuals?
Your other point does make sense though, corrupt people only want property in Toronto and Vancouver, thats the way it has always been and always will be…….. Nothing you can do to change this fact.
To assert that prices will never fall in Toronto and Vancouver because of dark money means that all the pricing growth on the way up was influenced by these factors. Did foreign and local speculators not make a difference? What about immigration? What about locals looking to raise a family. The government has taken strong steps to lower demand from these groups. But don’t worry corrupt money will only poor into our two cities which have been called out for ridiculous bubbles and it will flow in such a degree to keep prices flat or rising….. Locals will never stand a chance.
If this is the truth, I think we should just let all of that corrupt money buy out our over leveraged households, reducing canadian household exposure and then confiscate the properties back later. “Proceeds of Crime”………. maybe that would save our economy, and then we could give all the cofiscated properties to lower income people…….. stone two birds at once!
In regards to “you ever think banks will ever do anything to lower profits” – See the article from last week about CIBC getting rid of their 35% down liar loans to foreigners. Also, I seem to remember one or two US banks losing some money when their housing bubble blew up.
Last point……… you also acknowledged that corrupt money has other choices than Canada……….. Sydney, London, New York Etc……. If i was a corrupt foregn official I would rather put my hard dark money into a market that does not have falling prices, or a falling currency.
We can wait and see. So far our government and banks didn’t give a shit about locals. What make you think things will change suddenly. Hoping they will rescues us is wishful thinking.
Wow. You finally caught up to my posts. You know, the one about ‘real estate’ as a vehicle for ‘money laundering’, and that it could be a bigger factor than’investment money’?
So, the wise heads around here should read my posts and then predict what your upcoming articles are going to be about?
No problem, just give me the credit.
Right, because nobody discussed those things before you brought them up. Better Dwelling has in fact addressed the money laundering and land banking issues in previous posts going back many months.
Lately you have been showing up boasting “I predicted this” and “I predicted that.” It’s getting tiresome. You really haven’t predicted anything, and your posts are generally a convoluted mess conflating your opinions with facts. You seem more interested in being seen as knowledgeable rather than attaining knowledge. You’re failing on both measures.
And your accuracy rate?
Is this perhaps jealousy?
Or are you just upset that my predictions are counter to your ideas, but mine come true, and your prognostications come to naught??
So money laundering is a factor in Canadian RE. That’s you’re “prediction”? You predict past events and they come true. Quite the talent. Try predicting a future event.
It’s not like you’re incapable of making intelligent and informative posts. Your post on Xi below for example. More of those please, and less boasting about your imaginary forecasting ability.
The fact is, this column is pushing INVESTMENT as the main driver of foreign investment, and not being that successful.
My point is, that there is absolutely no supporting proof of this. I do not accept that premise. It is just as supportable to posit that money laundering is the biggest driver of foreign investment. Especially when banks did not require foreign income to be validated. Low interest rates make Canadian real estate a prime target for money laundering. Almost every penny goes to laundered assets, the cost of doing the laundry is minimal. Exchange rates are irrelevant. Yet this is the first article that really addresses this issue, and that just after I made a really big push for this idea.
EDIT Not specifically THIS column, but the premise of the site in general, is foreign investment, not foreign money laundering.
Meanwhile:
“Adjusting for seasonality — construction tends to slow during winter months in Canada — February was the strongest month on record in data back to 1990.”
https://www.bloomberg.com/news/articles/2018-03-08/canada-housing-starts-unexpectedly-accelerate-in-february
1990, eh? There is something about that time that rings the bell… BTW, not adjusted starts are the highest since 1948.
Middle to end of phase 3; Hyper supply
https://betterdwelling.com/canadian-real-estate-works-in-a-cycle-heres-where-we-are/
Thanks for posting, a terrific summary of the boom-bust cycles.
Lol: “Phase three is the hypersupply phase, which is the phase I believe we’re entering in Toronto. This is when everyone feels like a real estate investment genius, even though most people can’t even tell you much they paid in interest. ”
Brilliantly observed!
There is an interesting counter-move behind the scenes, that Canada should prepare for, legally.
President X i is now seizing foreign assets, including real estate, of Chinese who are trying to get their wealth out of China.
It will be very interesting to see the position Canadian courts take on the issue.
What happens if the successors to these governments decide to re-claim the wealth? A lot of Canadian real estate could get tied up in the courts for a very long time.
I really thought Xi was forcing many of these companies to deleverage, b/c as interest rates rise, and debt needs to be rolled over, many of these entities could be labeled as too big to fail, and would require government loans in the future. The recent seizure of assets by Xi, was due to companies on the verge of collapse or caught in scandal.
It’s looking more and more that some Chinese firms were using cheap debt to go around the world and binge on foreign assets. Now China fears a collapse, like Japan had in the late 1980’s with its expansive real estate holdings. So Xi is forcing these companies to deleverage, and liquidate holdings, esp. commercial real estate and eventually residential.
See for instance this:
https://www.forbes.com/sites/sarahsu/2017/12/22/china-tightens-overseas-investment-to-reduce-risks/#79545213772c
‘The National Development and Reform Commission, along with four other agencies, released rules that require private enterprises to invest in overseas deals that are genuine and not meant to be used for transferring assets abroad or for money laundering. ‘
Note the specific mention of money laundering. Yes, this is an American-centric financial media, but nevertheless there is accuracy in it.
Gezzzzzzzzz Stephen, when are you going to give us some good news 🙁
Canadian officials do like to aggressively go after honest hard working Canadians:
https://infotel.ca/newsitem/malicious-prosecution/cp821109958
But back to the problem at hand. Here’s a simple fix: Canadians take great advantage of capital gains exemptions on their primary residence. But the feds never enforced this well. So let’s fix this. Anyone who doesn’t live and work in Canada pays our full federal marginal tax rate (not even the 50% discounted Capital Gains tax rate) on price gains realized when they sell a property. This tax should be withheld upon title transfer by the real estate lawyer.
I’ve come to believe that it is our lack of ownership transparency, and lack of taxation on real estate capital gains that has made Canada the patsy to the worlds criminals.