Fraud, real estate laundering are exploiting the same vulnerabilities

Fraud, real estate laundering are exploiting the same vulnerabilities

Fraud, real estate laundering are exploiting the same vulnerabilities

Canada’s porous justice system is promoting the rapid growth of fraud as a business, a former RCMP top investigator has warned.

These criminal enterprises are using the same systemic vulnerabilities that foster the prevalence of money laundering in Canada’s largest housing markets, according to Henry Tso, the former head of RCMP’s federal organized crime and financial integrity team in BC.

Tso, who now works with MNP as a senior consultant, said that among the worst of these weaknesses are toothless prosecution, weak sentencing, and insufficient resources for law enforcement.

As a result, up to $6 billion in proceeds from criminal activity move through the Canadian financial system every year. Canadian businesses lose around $3 billion to fraud annually, while individuals were swindled of roughly $405 million from January 2014 to December 2017.

“Fraud is very similar to money laundering, but with fraud they are also generating large amounts of criminal money,” Tso told Global News.

“Organized crime knows fraud is the way to go. Because if you get caught it is not like getting caught for drug-trafficking.”

Moreover, criminal organizations rely on accountants, lawyers, computer experts, and other skilled professionals to project an aura of legitimacy in their operations, all the while laundering behind the scenes.

“Organized crime is not blue-collar now,” Tso stated. “They are very sophisticated.”

Among the most serious of such cases in recent memory was the alleged laundering of funds through a Metro Vancouver condo project by a rumoured Chinese drug ring head.

According to an exhaustive investigation by Global News, said condo development has been grabbed by Kwok Chung Tam, who reportedly holds a high position in the Big Circle Boys cartel, according to the Canada Border Services Agency.

Tam surreptitiously used a “bare trust” joint venture via Liberal MP Joe Peschisolido’s law firm to acquire a majority stake in the project. Peschisolido has maintained that he had no knowledge of the transaction.

Per court records, Tam was still serving a conditional sentence for a 2010 drug trafficking conviction at the time of the deal’s completion.