In light of the Globe and Mail’s explosive story revealing how drug money from the fentanyl trade is being laundered through Vancouver real estate with money provided by private mortgage lenders, there are concerns that the issue has been misrepresented.
Specifically, the Globe article referred to the money launderers as “private lenders,” however, according to a senior mortgage broker with Invis, the characterization was inaccurate and there could be ramifications.
“They’re money launderers,” said Ajay Soni, “using the mortgage industry, and mortgages in general, as a way of laundering their money. It concerns us, because [the Globe and Mail article] implies that all private lenders are being put into this group and it is not accurate. They should be calling them money launderers; they’re not private lenders. None of us know who they are in our industry in B.C.”
Soni added that the Globe and Mail used very broad language in its reporting and he’s disappointed the newspaper did not contact the CMBA—where Soni is the national president—for comment.
British Columbia Attorney General David Eby is on the record as stating a crackdown is forthcoming, although he hasn’t divulged much about what it would entail. Soni did express disquiet that the minority provincial government could act in haste.
“It’s a knee-jerk reaction to something he and his office may not fully comprehend right now,” Soni said in reference to Eby. “They say they’re going to close loopholes, but there aren’t any. If you want to commit a crime, you commit a crime.
“The government is in a political situation as a minority government, so everything is a knee-jerk reaction—it’s as if the sky is always falling—but they have to understand what’s going on here. Cash is being advanced to people who borrow money, and they send it back as legitimate funds in a bank account. Any cash advance of over $10,000 has to be declared.”
Although the real private lending channel could become unfairly scrutinized, Soni is confident that it will be vindicated because it hasn’t acted unlawfully. Moreover, he called attention to the fact that the Mortgage Brokers Act, which goes back to 1972, isn’t often dissected like it is in Ontario, where it’s revisited every five years.
McKay Wood, a mortgage broker with Verico Mortgage Pal, says he scratched his head while reading the Globe and Mail article, stating it used incorrect terminology.
“My initial thoughts were private lending in our space is typically referred to as mortgage investment corporation, not shark lending,” he said. “They did not use the correct term. We don’t deal with the illegitimate people that the article refers to. That threw me a bit.”
Albert Collu, Verico’s president, echoed both men’s sentiments.
“It was not a responsible statement that money laundering activities are filtering through mortgage brokers for private funds,” said Collu. “People outside our industry fail to remember that when you’re talking about private investing, even a one-on-one relationship, a mortgage professional is bound by a number of things, like confirming the identity of the investors. More oversight on private lending is by and large there—throughout most of Canada, it’s overseen by securities commissions.”