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Party Leaders Are Talking Dirty Money on the Election Trail

Who’s offering fixes, and why BC’s AG says federal action is key.

Jen St. Denis 9 Oct 2019 | TheTyee.ca

Jen St. Denis is a Vancouver-based journalist who has covered housing, economics, business and politics. Her work has appeared in Star Vancouver, the Toronto Star, Vancouver Sun, Business in Vancouver and Vancouver Courier.

As federal candidates crisscross the nation in advance of the Oct. 21 election, they’ve been talking to voters about bread-and-butter issues like taxes, health care and the rising cost of housing.

But this campaign also features party leaders making promises about how they’re going to get tough on money laundering.

Conservative Leader Andrew Scheer has promised a national inquiry, while the NDP’s Jagmeet Singh said his government would create a public national registry to reveal the true owners of real estate and provide more funding for the RCMP. The Green party has also promised a national inquiry.

While the Liberals haven’t made a major new proposal, their government boosted funding for the RCMP to investigate financial crime and changed a law that makes it easier to prosecute money laundering.

“Washing” dirty money made from fraud or selling drugs is a complicated financial crime most Canadians probably associate more with American television shows like Breaking Bad and Ozark than anything they experience in their day-to-day lives. So why is it popping up on the campaign trail?

Blame British Columbia. The province has been reeling from the revelation that millions, and possibly billions, in dirty money was washed through Lower Mainland casinos over a decade. According to a June 2018 report by former RCMP commissioner Peter German, the activity continued long after the provincial regulator and government had been repeatedly warned of the problem.

Two additional reports, released earlier this year, flagged similar concerns in the province’s real estate and luxury car sectors, and estimated that money laundering increased housing prices in B.C. by about five per cent. Vancouver already has the highest gap between housing prices and median incomes in North America.

“We’ve identified a clear link between a number of things that have been happening in our province,” said David Eby, B.C.’s attorney general, in a telephone interview.

“That includes the fentanyl overdose crisis, the proceeds of fentanyl being laundered through the province. It includes the cost of housing, inflated by criminal use of our housing market or people using our housing market to evade taxes.

“And finally, in terms of general understanding that if you work hard and play by the rules, you get ahead — it’s starting to feel to people that that’s no longer true.”

After crusading on the topic for years, Eby told The Tyee he’s glad the issue is gaining more attention from federal parties. Action from the federal government is key, Eby said, because it has responsibility for Canadian banks; the country’s federal police force, the RCMP, and responsibility for crime that extends outside Canada’s borders; and Canada’s financial intelligence unit, FINTRAC.

“Regardless of who gets elected (we need) to be able to work with them and have them understand it’s an important issue, regardless of which party they come from,” Eby said.

Calls for a public registry of company owners

But experts have long warned that Canada has some of the weakest anti-money laundering regulations among other western democracies, and after years of the federal government dragging its feet, they say they’d like to see more from party leaders.

A key piece — a public national registry that would allow anyone to look up the true owners of companies in Canada — is missing from all of the recent campaign promises.

“Without a publicly accessible beneficial ownership registry, you’re going to continue to have money laundering coming in from all over the world,” said Kevin Comeau, a former corporate lawyer who has written several policy briefs on money laundering for the C.D. Howe Institute.

“It means the money is pouring in, and that money is harming Canadians in multiple ways. For the political parties to not be taking any strategy towards stopping that is kind of surprising and disappointing.”

Scheer’s promise of a national inquiry shows that he’s “making a step” towards tackling money laundering, Comeau said. But: “make no mistake, it is about the smallest step you could possibly make,” Comeau said. “You’re basically saying, I’m not committing to do anything except we’ll look at it.”

If the federal government waited for the inquiry to be complete before putting in place recommendations from several existing reports, a national inquiry could even delay government action, Comeau said.

The B.C. government will be holding its own provincial inquiry into money laundering, and Eby said he hoped the inquiry would reveal why there have been so many failures when it comes to deterring and prosecuting money laundering. For instance, he said, he hopes the inquiry will shed light on the reasons the federal prosecution of a network of underground bankers in Richmond, B.C. that was allegedly laundering over a billion a year fell apart in November 2018.

But when it comes to revealing anonymous company owners, B.C. has also passed or introduced legislation that makes it possible to find out who owns both real estate and companies in the province. That legislation makes B.C. a leader among Canadian provinces.

Eby declined to discuss the federal parties’ campaign promises on money laundering. But when asked which one loophole he would close immediately, Eby said his top priority was “the ability to buy property anonymously, and the ability to operate a company anonymously.”

The NDP’s proposal to create a national public registry to show who owns real estate is a good first step, but it’s a half-measure if the registry is limited to property, said Denis Meunier, a former director general of enforcement at the Canada Revenue Agency. To be effective, the public — including journalists, businesses and law enforcement — need to be able to find out who owns the companies and trusts that are used to hide and transfer wealth.

In their 2019 budget, the Liberals pledged $163 million to the RCMP and other federal agencies to better track and investigate money laundering.

But Meunier said those investigative efforts will hit a brick wall if there’s no public beneficial ownership registry for corporations. That’s something the Liberals have steadfastly refused to create, even though jurisdictions like the United Kingdom and European Union have already moved to put public registries in place.

‘A home for billionaires’

Tying money laundering to high housing prices has given politicians and advocates a hook to show voters why they should care about complicated financial crimes, but recent polls show that Canadians are already well aware of the problem. A Sept. 17 Angus Reid poll showed that 74 per cent of Canadians thought money laundering was a problem in their province, with the highest numbers in B.C. (90 per cent) and Quebec (83 per cent).

While Meunier and Comeau are sharply critical of the federal government’s track record on fighting money laundering, Eby said the feds are “light-years” from where they started. Recent amendments to the Criminal Code, for instance, will make it easier to prosecute money laundering.

“There’s very little debate that Vancouver in particular has become a home for the world’s millionaires and billionaires,” Eby said.

“Making sure that our tax system and our criminal law enforcement system responds to that, as the world’s global elite convene in Vancouver, is really important to a lot of British Columbians.

“Because if our systems don’t respond to it, we don’t just become a hub for wealthy people, we become a safe harbour for international wealthy criminals.”  [Tyee]

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