Had former Prime Minister Stephen Harper not slashed $500 million from the RCMP’s budget to fight organized crime, money laundering through Canadian real estate wouldn’t be rampant today, charges a lawyer.
“The RCMP is the only entity that investigates money laundering and Stephen Harper shut it down when we had the financial crisis in 2007 to 2008. The question is why did he eliminate the money from the RCMP’s budget? Because money laundering is foreign investment and every country in the world wants foreign investment because it wants economic growth,” said David Franklin.
British Columbia is holding a public inquiry into money laundering, but Franklin questions whether it’s sincere or mere “window dressing” because curbing the inflow of dirty money would technically reduce the amount of foreign investment in Canada and, therefore, slow the economy —a risky proposition with an election looming.
The Ontario government just lobbied Ottawa for funding to fight money laundering. In a letter to federal Finance Minister Bill Morneau, Ontario Finance Minister Vic Fedeli indicated the province was willing to establish a beneficial ownership registry, and while a registry is imperative, there could be a way to both curtail money laundering and monetize it.
“They can make the RCMP into a profit centre for the government because now you’re bringing in $50 billion to $100b a year—we don’t know how much but that’s one of the estimates [C.D. Howe Institute estimates $100-130b is laundered in Canada every year],” said Franklin. “England and Wales passed the Unexplained Wealth Order. Under that act, if people can’t explain where the money came from to buy real estate assets, the real estate is forfeited. It’s seized by the government and sold.”
Unexplained Wealth Orders involve what’s called a “reverse onus” in legalese, and Franklin isn’t sure whether or not it would conflict with the Charter.
“We might have to amend some of our laws to make sure we can do this,” he said. “Normally the police have to charge you with a crime to prove it, but here they tell you to prove to them where you got money to buy the house.”
By creating a whistleblower clause, which would entice the public to participate in identifying ill-gotten gains, the government could really pad its coffers.
“If the public sees a 20-year-old kid or a housewife living alone in a $10m home, the public will start paying closer attention if they know they can get a reward,” said Franklin.
In the interim, Fideli would like Ottawa to buttress Ontario the same way it has B.C.
“I propose a new task force dedicated to anti-money laundering measures in Ontario that would be federally funded proportionately to the B.C. initiatives.”