Money laundering In Canada

Money laundering in Canada is a problem described by professionals in 2019 as a "national crisis," and which has attracted international attention.[1] Money laundering has become such a significant part of Canada's domestic economy that anti-money laundering experts have associated two distinct types of laundering (snow washing and the Vancouver Model) with the country. As of July 2022, a public inquiry is currently being held to gauge the extent of the problem.[2]

## Contents

* 1 Economic impact
* 1.1 Housing
* 1.2 Luxury vehicles
* 2 Snow washing
* 3 The Vancouver Model
* 4 References

## Economic impact

Canada generates a significant share of its gross domestic product (GDP) from money laundering. Canadian intelligence estimates $113 billion of funds are laundered annually, which works out to over 5% of GDP.[3] This generates significant demand for goods that may otherwise be considered essential, such as housing.[4]

### Housing

Canadian housing is a frequently used tool for money laundering that often involves organized crime, according to Criminal Intelligence Service Canada, one of the country's intelligence agencies.[5] The problem has become a global phenomenon in countries with high home prices and low levels of scrutiny for home purchases.[6] However, Canada is uniquely targeted due to a lack of beneficial ownership, meaning the true owner of property is never collected by authorities.[7]

### Luxury vehicles

Canada's lack of vehicle purchasing regulations have made luxury passenger vehicles a common tool for money laundering. Luxury vehicles are purchased with illicit cash since payments are only regulated in some provinces, and then sold. The depreciation is a relatively small price to obtain clean money that can be deposited into a bank account with a clear source of funds.[8]

## Snow washing

Further information: Snow washing

Snow washing is the process of routing illegal activity through Canada to capitalize on its reputation as a “boring” and safe place.[9]

## The Vancouver Model

The Vancouver Model is the name anti-money laundering experts gave to a unique model observed in Vancouver , Canada.[10] It involves taking illicit cash earned through crime to a casino (often a VIP room), and gambling some of the proceeds.The chips are then cashed out of the casino as clean cash. To further obfuscate the funds in a money laundering process known as layering, the funds are then used to buy assets such as real estate.[11]

Once the real estate is sold at a profit, sometimes to a related party, the funds are considered legitimate (and often tax free) profit. A combination of Canada’s opaque ownership laws and low scrutiny on foreign investment makes it an ideal target.[12]

## References

1. ↑ "Money laundering is a national crisis. What now?" (in en). https://www.cpacanada.ca/en/news/pivot-magazine/2019-07-03-jose-hernandez-money-laundering.
2. ↑ Kane, Laura (2020-02-24). "Money laundering in B.C.: Public inquiry begins in Vancouver" (in en). https://bc.ctvnews.ca/money-laundering-in-b-c-public-inquiry-begins-in-vancouver-1.4824852.
3. ↑ "As Canada's home prices soared during COVID-19, real-estate money laundering audits fell 64% | Globalnews.ca" (in en-US). https://globalnews.ca/news/8585741/canada-home-prices-skyrocket-covid-19-real-estate-money-laundering-audits/.
4. ↑ Francis, Diane (2022-01-13). "Diane Francis: Shining a light on money laundering in Canadian real estate" (in en). Financial Post. https://financialpost.com/diane-francis/diane-francis-shining-a-light-on-money-laundering-in-canadian-real-estate.
5. ↑ "Canadian Real Estate Has A Money Laundering and Fraud Problem: Intelligence Report" (in en-US). 2022-05-06. https://betterdwelling.com/canadian-real-estate-has-a-money-laundering-and-fraud-problem-intelligence-report/.
6. ↑ "Widespread money laundering in property locking out Australians from owning homes, Senate told" (in en). 2021-11-09. https://www.theguardian.com/australia-news/2021/nov/09/widespread-money-laundering-in-property-locking-out-australians-from-owning-homes-senate-told.
7. ↑ "Report: Opacity - Why Criminals Love Canadian Real Estate (And How to Fix It)" (in en). 2019-01-10. https://www.taxfairness.ca/en/resource/report-opacity-why-criminals-love-canadian-real-estate-and-how-fix-it.
8. ↑ "Why do we allow money laundering in the auto industry?" (in en-CA). https://driving.ca/column/lorraine/why-do-we-allow-money-laundering-in-the-auto-industry.
9. ↑ "Canada is the world’s newest tax haven | Toronto Star". https://projects.thestar.com/panama-papers/canada-is-the-worlds-newest-tax-haven/.
10. ↑ "How Chinese gangs are laundering drug money through Vancouver real estate | Globalnews.ca" (in en-US). https://globalnews.ca/news/4149818/vancouver-cautionary-tale-money-laundering-drugs/.
11. ↑ "How criminals used Canada's casinos to launder millions" (in en). 2018-10-15. http://www.theguardian.com/world/2018/oct/15/canada-money-laundering-casino-vancouver-model.
12. ↑ "Opacity: Why Criminals Love Canadian Real Estate". https://static1.squarespace.com/static/5df7c3de2e4d3d3fce16c185/t/5dfb8d2f0fcfd12e7e7affaf/1576766769166/opacity-executive-summary-english.pdf.

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