Suspicious transactions tied to foreign buyers

Banks have flagged a number of suspicious transactions, mostly coming from one specific country

Suspicious transactions tied to foreign buyers

Vancouver-based banks reported more suspicious applications coming from mainland China than any other country.

Banks are required to report any suspicious activity to the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), and the Globe and Mail received that data through an access of information act. It shows that Vancouver banks reported suspicious transactions originating from mainland China 17 times more often than transactions originating from any other country.

According to the Globe’s findings, financial institutions in Vancouver, Richmond, West Vancouver, and North Vancouver, reported more than 8,600 suspicious transactions to FinTRAC between January 2012 and July 2015.

Of those transactions, 5,895 came from unknown origin and 1,660 were made by Canadian citizens.

Of the remaining 1,045 flagged transactions, 83% (865 reports) came from mainland China.
These reports are purportedly triggered when the sum is larger than $10,000, when third parties send frequent wire transfers to clients, or when multiple deposits from someone other than the account holder are made.

Attorney Christine Duhaime told the Globe that while it could not be determined whether the incoming suspicious funds were used to purchase real estate, one could “surmise pretty accurately that if the funds are from China and involve large volumes, they are for real estate purchases, because there is not much else foreign nationals from China buy in Canada that would trigger a [suspicious transaction report].”

Potential money laundering in Canadian real estate – including from China – has been a topic of growing interest.

The FinTRAC data publication comes on the heels of a recently released CMHC report on the amount of foreign condo investment in Toronto and Vancouver.

Foreign condo owners own 3.5% of units in Vancouver and 3.3% in Toronto; up from 2.3% and 2.4% a year ago, respectively.

The methodology is somewhat incomplete but a step in the right direction in determining how much those major markets are being influenced by foreign money.