Former FINTRAC deputy director says that more stringent measures are required to weed out “opaque” home purchases
Ontario’s government needs to take strong concrete steps towards stamping out money laundering in the province, which usually takes the guise of “opaque” home purchases.
In an interview with Global News, former FINTRAC deputy director Denis Meunier emphasized that Ontario’s current safeguards are not nearly enough to counteract the corrosive market influence of laundering.
Last month, the Ford government passed Bill 108: More Homes, More Choice Act. However, while it aims to improve affordability by boosting supply and reducing red tape in residential development, money laundering is not addressed anywhere in the bill.
“Whether it’s in this bill or another bill, they [Ontario’s government] know there’s a problem,” Meunier said.
A report by Transparency International Canada released earlier this year backed up Meunier’s thesis, indicating that money laundering via real estate is an all-too-common phenomenon in the nation’s most important property markets, especially Toronto and Vancouver.
A home purchase where the true owner of the property remains concealed (almost always through a shell corporation) is deemed an “opaque” transaction, and TI Canada warned that this is a major red flag pointing to illicit activity.
Since 2008, these corporations have acquired more than $28 billion in houses in the GTA alone. The volume represented nearly four per cent of the region’s total transactions during that decade.
This underground trade played a significant part in heating up residential property costs to record highs. The Royal Bank of Canada’s annual report on housing affordability found that the average Toronto household costs over $850,000, far above the national average of $562,000.
Meunier stressed that one of the most effective steps that Ontario can take is to follow British Columbia’s lead in establishing a central registry for property purchases and ownership.