A new report from a B.C. panel states that Alberta tops the list of targets for money launderers, accounting for about one quarter of the total flushed through the system in the country.
Approximately $41.7B was laundered in Canada in 2015, with $6.3B of that in B.C. alone.
According those same statistics, Alberta recorded $10.2B in laundered money. Officials say the province’s rising crime rate and low GDP due to the drop in oil prices is mainly to blame.
The Criminal Code of Canada defines money laundering as the practice of transferring the proceeds of a designated offence to obtain property with the intent to conceal the origins of those proceeds.
Officials say significant proportion of the illegal money entering B.C., approximately $5B, had a significant effect on the prices of homes, pushing them up by approximately five percent.
The report says part of the reason that real estate is so attractive to money launderers has to do with how easy the offence is to hide. Using large sums of money to purchase property doesn’t arouse much suspicion and real estate is often a very secure investment. It’s also particularly attractive in high demand markets experiencing rising prices.
Money launderers can also benefit from those illegally-obtained properties by profiting from capital gains from sales, rents accrued from use of the property and debt service payments from financing the property.
But the statistics show that the hot real estate market isn’t the only reason for the high rate of money laundering; regions with more affordable housing are also being targeted.
As a result, B.C.’s attorney general says the issue has reached a national crisis level and the federal government needs to take action.
“Wealthy criminals, and those looking to avoid taxes, have had run of our province for too long,” said David Eby.
The report also outlines a series of 29 recommendations to combat money laundering, grouped into five areas: improving regulations, bringing new federal laws into effect, employing better means to share information, building special investigation skills and involving other provinces on the response.
It’s also difficult to prosecute money launderers in Canada, the report indicates. Statistics show that in the past 10 years, there have been fewer than 50 money laundering convictions in Canada, compared to 1,168 convictions secured by the Netherlands Prosecutor’s Office in 2015 alone.