Real estate in West lures laundered money


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London has gained notoriety as a favorite location for laundering illicit cash through real-estate deals, but a new investigative report describes how other locations like Vancouver, Canada, have become of prime destination of Chinese nationals seeking to spirit large sums of cash out of their home country and launder it through Vancouver real-estate purchases.

‘Province’ reporter Sam Cooper recently delved into the phenomenon of Chinese cash flooding the Vancouver real estate market, and he demonstrates how border laws and limited regulation draw Chinese money launderers to the west coast of Canada and also to cosmopolitan cities like Toronto.

Cooper notes that Vancouver International Airport is a major focal point of the importation of vast sums of cash and similarly liquid monetary instruments, largely because Canadian law—while it requires that amounts over $10,000 be declared—returns undeclared cash to the carrier immediately and only with fines that max out at $5,000. The U.S., which also sees a lot of laundered money, seizes undeclared cash, places more stringent requirements and legal-intensive conditions for its return to the original carrier, and charges fines in the hundreds of thousands of dollars.

Vancouver as an entry point is made all the more appealing due to its high-value real estate and its limited investment rules and CDD (KYC) requirements for real-estate purchases.

Cooper notes in his reporting that Chinese nationals with large sums of illicit cash to launder outnumber other nationalities combined and that the number of Chinese nationals bringing their cash into Canada far outpaces the number who try to sneak their illicit funds into the U.S. Canada’s laxity in this behavior has riled the Chinese government, which is actively seeking to stem the tremendous outflow of cash arranged by citizens seeking to move profits from political corruption out of the country and into untouchable locations.

The reporter relates one instance in 2012 in which a Chinese national entered Canada with nearly $180,000 hidden in his suitcase and the lining of his clothing. Customs officials seized the hidden money, but they immediately returned it to him—minus a $2,500 fine—and let him leave the airport with cash in hand.

This  approach may be in decline in the future, however, as Chinese authorities are pressing for diplomatic agreements that would press Canada and other western nations to take stronger action against the influx of corruption proceeds from Chinese nationals who are evading authorities in their home country.