An HSBC whistleblower has alleged that Chinese money has sent Toronto real estate prices skyrocketing, prompting investigative journalist Sam Cooper at The Bureau to look further.The whistleblower, a Canadian business school graduate dubbed "D.M.", found suspicious home loans he discovered in 2022 when he joined a mortgage approval team in a small HSBC branch in Aurora, ON on the outskirts of Toronto.Chinese migrants across Toronto were obtaining mortgages from HSBC while supposedly earning large salaries from remote-work jobs in China. An Ontario casino worker that owned three homes claimed to earn $345,000 in 2020 doing data analysis for a Beijing company. D.M. had studied mortgage frauds for his Business Masters degree at Vancouver Island University. As he looked deeper into HSBC books and interrogating his colleagues, he found problems.Since 2015, D.M. said, more than ten Toronto-area HSBC branches had issued at least $500-million in home loans to diaspora buyers claiming exaggerated incomes or non-existent jobs in China. The pandemic was a good cover story for claims of large incomes while working remotely. According to D.M., a small bank of Aurora’s size was expected to issue about $23-million in residential loans every year, but issued $88-million in mortgages in 2020, according to the whistleblower and more than $50-million in 2021.D.M. immigrated to Canada as an international student from India but had mostly Chinese-Canadian co-workers at the Aurora branch. His discussions led him to believe that HSBC Canada and other Canadian banks had systemic problems with highly-questionable mortgages issued to buyers with unverified sources of wealth in China.In April 2022, D.M. sent an email to senior bank executives, saying, “I am going to reveal potential mortgage fraud at HSBC Bank Canada and possibly some employees benefited from the fraud, financially pocketing thousands of dollars, which I call the proceeds of crime.”The four-page complaint triggered an internal investigation that led to some reforms at HSBC Canada according to internal emails obtained by The Bureau. However, D.M. was so dissatisfied with the bank’s response, he eventually shared his story and numerous internal documents with the media and public.The Bureau asked HSBC Canada to review emailed information for this story and requested an interview regarding D.M. 's records and allegations. Sharon Wilks, head of communications, declined to provide someone, but responded, “As a global bank, HSBC is at the forefront of efforts to identify, prevent and deter financial crime. We will not do business with individuals or entities we believe are engaged in illicit conduct.”Wilks added that HSBC Canada “can and do regularly exit relationships with clients whose activities we deem too risky.”The Western Standard also asked HSBC for comment but did not receive a reply before publication.“There are thousands of these cases, large scale,” D.M. told The Bureau in an interview. “Hardworking Canadians are denied mortgages and these Chinese residents forge documents and get mortgages approved, heating up the already hot Ontario real estate markets.”“These people don’t have steady jobs or income in Canada,” he alleged, “but what they are doing is scams to launder money and get mortgages using fake documents.”The Bureau’s investigation included asking seven prominent Canadian experts to assess some of D.M.’s documents, allegations and conclusions. The investigation suggested D.M.'s calculation is "plausible", that the Aurora branch and other Toronto-area HSBC branches have issued at least $500-million in questionable Chinese income loans since 2015.But D.M’s findings could also change the public’s understanding of housing affordability in Toronto and Vancouver, because his evidence fits into FINTRAC’s much broader examinations of suspicious real estate and banking transactions.In 2023, the anti-money laundering watchdog published a ground-breaking study into 48,000 Chinese diaspora banking transactions.FINTRAC found that during the COVID-19 pandemic, because Canadian casinos were closed, Chinese underground banking schemes evolved, flooding electronic fund transfers from Hong Kong into Canadian bank accounts that served as corridors for murky real estate transactions. In 2015, Prominent Canadian academic Andy Yan studied Vancouver land titles and mortgages. That examination of $525-million worth of real estate purchases in a six-month period found 66% of buyers in several affluent neighbourhoods were recent Chinese diaspora migrants and most mortgages went to buyers with little or no income in Canada. The average home price in Yan’s study was $3-million.Similarly, what D.M. found in his probe of pandemic-era loans could be called the evolving “Toronto Method” of an underground banking system discovered first in Vancouver and found to be laundering a stunning $1.2-billion in cash from Mainland China through BC government casinos in 2014.This system of shadowy transfers was dubbed the “Vancouver Model” by an Australian professor and brings together transnational organized crime, affluent Chinese nationals seeking to export their wealth abroad and Canadian casinos, banks and real estate, in transactions that evade policing because the pivotal cash exchanges are done off the books by professional money launderers serving the global Chinese diaspora.According to FINTRAC’s 2023 study of 48,000 pandemic-era transactions, this evolving Vancouver Model network “simultaneously facilitates money laundering and the circumvention of Chinese currency controls”“As a result of the temporary closures of Canadian casinos due to the COVID-19 pandemic, professional money launderers began to diversify their money laundering methods,” FINTRAC’s study says.“During this time, FINTRAC observed a rise in money laundering typologies involving transferring large sums of funds to Canada from foreign money services businesses, often located in China, notably Hong Kong and the laundering of the funds primarily through the real estate, securities, automotive and legal professions.”These wire transfers from China were routed into bank accounts of “multiple, unrelated individuals in Canada,” that served as “money mules” in byzantine networks involving Canada-based real estate developers, real estate agents, mortgage brokers and banks.“Mortgage payments are sourced from incoming funds from China,” FINTRAC’s alert said.In an interview, D.M. said banking staff are trained to guard against fraud, and the loan application packages he reviewed in Aurora beggared belief.“The bank found out that one lady works in a casino part-time but got a $1.4 million mortgage showing over $300,000 annual income,” he said. “Plus she takes money as benefits from the government, for her two kids.”In other examples, an HSBC mortgage client claimed to earn $700,000 annually for remote work in China, while simultaneously living in Canada and paying off a $10,000 student loan. Another woman who owned homes in Aurora, Markham and Scarborough, worked part-time as a hairdresser while also claiming to earn $536,280 at a “Business Manager” job in Guangzhou. “Canadian workers have been put out of the real estate market by people working as a hairdresser that own a couple homes,” D.M. said in an interview.“How is that fair?”The most shocking case reviewed by The Bureau, shows that one woman that owns at least four Toronto properties opened her HSBC Aurora bank account in 2012, claiming to be a “Homemaker with no annual income.” But her Toronto account soon received incredible amounts of wire transfers from HSBC China accounts, and paid out “high value cheques” to third parties for real estate purchases. In 2020, this same woman applied for another HSBC Canada mortgage, claiming to earn $763,000 remotely from her job in China.Stephen Punwasi, a Toronto real-estate analysis who, in his own article on January 29, said his city had imported the "Vancouver laundering model" that included international criminals, casinos, and real estate. Cooper interviewed Punwasi and Yan in a 5,000-word investigation, which can be read here.
An HSBC whistleblower has alleged that Chinese money has sent Toronto real estate prices skyrocketing, prompting investigative journalist Sam Cooper at The Bureau to look further.The whistleblower, a Canadian business school graduate dubbed "D.M.", found suspicious home loans he discovered in 2022 when he joined a mortgage approval team in a small HSBC branch in Aurora, ON on the outskirts of Toronto.Chinese migrants across Toronto were obtaining mortgages from HSBC while supposedly earning large salaries from remote-work jobs in China. An Ontario casino worker that owned three homes claimed to earn $345,000 in 2020 doing data analysis for a Beijing company. D.M. had studied mortgage frauds for his Business Masters degree at Vancouver Island University. As he looked deeper into HSBC books and interrogating his colleagues, he found problems.Since 2015, D.M. said, more than ten Toronto-area HSBC branches had issued at least $500-million in home loans to diaspora buyers claiming exaggerated incomes or non-existent jobs in China. The pandemic was a good cover story for claims of large incomes while working remotely. According to D.M., a small bank of Aurora’s size was expected to issue about $23-million in residential loans every year, but issued $88-million in mortgages in 2020, according to the whistleblower and more than $50-million in 2021.D.M. immigrated to Canada as an international student from India but had mostly Chinese-Canadian co-workers at the Aurora branch. His discussions led him to believe that HSBC Canada and other Canadian banks had systemic problems with highly-questionable mortgages issued to buyers with unverified sources of wealth in China.In April 2022, D.M. sent an email to senior bank executives, saying, “I am going to reveal potential mortgage fraud at HSBC Bank Canada and possibly some employees benefited from the fraud, financially pocketing thousands of dollars, which I call the proceeds of crime.”The four-page complaint triggered an internal investigation that led to some reforms at HSBC Canada according to internal emails obtained by The Bureau. However, D.M. was so dissatisfied with the bank’s response, he eventually shared his story and numerous internal documents with the media and public.The Bureau asked HSBC Canada to review emailed information for this story and requested an interview regarding D.M. 's records and allegations. Sharon Wilks, head of communications, declined to provide someone, but responded, “As a global bank, HSBC is at the forefront of efforts to identify, prevent and deter financial crime. We will not do business with individuals or entities we believe are engaged in illicit conduct.”Wilks added that HSBC Canada “can and do regularly exit relationships with clients whose activities we deem too risky.”The Western Standard also asked HSBC for comment but did not receive a reply before publication.“There are thousands of these cases, large scale,” D.M. told The Bureau in an interview. “Hardworking Canadians are denied mortgages and these Chinese residents forge documents and get mortgages approved, heating up the already hot Ontario real estate markets.”“These people don’t have steady jobs or income in Canada,” he alleged, “but what they are doing is scams to launder money and get mortgages using fake documents.”The Bureau’s investigation included asking seven prominent Canadian experts to assess some of D.M.’s documents, allegations and conclusions. The investigation suggested D.M.'s calculation is "plausible", that the Aurora branch and other Toronto-area HSBC branches have issued at least $500-million in questionable Chinese income loans since 2015.But D.M’s findings could also change the public’s understanding of housing affordability in Toronto and Vancouver, because his evidence fits into FINTRAC’s much broader examinations of suspicious real estate and banking transactions.In 2023, the anti-money laundering watchdog published a ground-breaking study into 48,000 Chinese diaspora banking transactions.FINTRAC found that during the COVID-19 pandemic, because Canadian casinos were closed, Chinese underground banking schemes evolved, flooding electronic fund transfers from Hong Kong into Canadian bank accounts that served as corridors for murky real estate transactions. In 2015, Prominent Canadian academic Andy Yan studied Vancouver land titles and mortgages. That examination of $525-million worth of real estate purchases in a six-month period found 66% of buyers in several affluent neighbourhoods were recent Chinese diaspora migrants and most mortgages went to buyers with little or no income in Canada. The average home price in Yan’s study was $3-million.Similarly, what D.M. found in his probe of pandemic-era loans could be called the evolving “Toronto Method” of an underground banking system discovered first in Vancouver and found to be laundering a stunning $1.2-billion in cash from Mainland China through BC government casinos in 2014.This system of shadowy transfers was dubbed the “Vancouver Model” by an Australian professor and brings together transnational organized crime, affluent Chinese nationals seeking to export their wealth abroad and Canadian casinos, banks and real estate, in transactions that evade policing because the pivotal cash exchanges are done off the books by professional money launderers serving the global Chinese diaspora.According to FINTRAC’s 2023 study of 48,000 pandemic-era transactions, this evolving Vancouver Model network “simultaneously facilitates money laundering and the circumvention of Chinese currency controls”“As a result of the temporary closures of Canadian casinos due to the COVID-19 pandemic, professional money launderers began to diversify their money laundering methods,” FINTRAC’s study says.“During this time, FINTRAC observed a rise in money laundering typologies involving transferring large sums of funds to Canada from foreign money services businesses, often located in China, notably Hong Kong and the laundering of the funds primarily through the real estate, securities, automotive and legal professions.”These wire transfers from China were routed into bank accounts of “multiple, unrelated individuals in Canada,” that served as “money mules” in byzantine networks involving Canada-based real estate developers, real estate agents, mortgage brokers and banks.“Mortgage payments are sourced from incoming funds from China,” FINTRAC’s alert said.In an interview, D.M. said banking staff are trained to guard against fraud, and the loan application packages he reviewed in Aurora beggared belief.“The bank found out that one lady works in a casino part-time but got a $1.4 million mortgage showing over $300,000 annual income,” he said. “Plus she takes money as benefits from the government, for her two kids.”In other examples, an HSBC mortgage client claimed to earn $700,000 annually for remote work in China, while simultaneously living in Canada and paying off a $10,000 student loan. Another woman who owned homes in Aurora, Markham and Scarborough, worked part-time as a hairdresser while also claiming to earn $536,280 at a “Business Manager” job in Guangzhou. “Canadian workers have been put out of the real estate market by people working as a hairdresser that own a couple homes,” D.M. said in an interview.“How is that fair?”The most shocking case reviewed by The Bureau, shows that one woman that owns at least four Toronto properties opened her HSBC Aurora bank account in 2012, claiming to be a “Homemaker with no annual income.” But her Toronto account soon received incredible amounts of wire transfers from HSBC China accounts, and paid out “high value cheques” to third parties for real estate purchases. In 2020, this same woman applied for another HSBC Canada mortgage, claiming to earn $763,000 remotely from her job in China.Stephen Punwasi, a Toronto real-estate analysis who, in his own article on January 29, said his city had imported the "Vancouver laundering model" that included international criminals, casinos, and real estate. Cooper interviewed Punwasi and Yan in a 5,000-word investigation, which can be read here.
