The Canadian government should ensure that industry players are complying with existing legislation to address the growing problem of money laundering in the country’s real estate, according to analysts.
In a report by The Canadian Press
, an access-to-information request for FINTRAC data revealed that 47 companies have not been complying with regulations compelling them to flag questionable deals, while 38 entities have been doing so only on a partial basis.
The significant number of violators, which was uncovered almost 15 years after the relevant laws have already been implemented, prompted various observers to put Canada’s federal administration to task for neglecting their duty to enforce the policies.
“The government should not be taking a lax approach to these practices,” federal NDP critic Brian Masse wrote in an email. “Instead it needs to ensure that real estate markets aren't being used for money laundering — and that money laundering isn't helping to drive rising real estate costs for Canadians.”
“We can have the best rules possible around keeping laundered money out of our real estate market, but if no one is enforcing those rules, what good are they?” B.C. NDP housing critic David Eby said. “The realtors appear not to be taking the rules or the reporting obligations seriously, and [FINTRAC] seems to be not too concerned when they see mass non-compliance.”
“I just wonder how many more audits with dismal results like this have to be returned to Fintrac and the federal government before they decide to really crack down,” Eby added.
Laundering of illicit funds has been tagged by several quarters as a crucial driving factor in the near-unstoppable price increases in leading metropolitan markets such as Vancouver.
“It's just [unreal] and it's not sustainable and it won't last. Unless people do something and do something quickly, it's going to blow the place up,” U.S.-based hedge fund manager Marc Cohodes said.