Canadian real estate is increasingly being used to launder dirty money, according to a recent warning from a federal agency, says Blacklock's Reporter. The Financial Transactions and Reports Analysis Centre (FINTRAC) has issued an Operational Alert, urging caution over suspicious activities in the real estate sector, including the flipping of titles on unbuilt condominiums."Canada’s real estate sector is used by criminals to facilitate tax evasion and money laundering," stated FINTRAC. The agency highlighted that Canadian real estate is not only an attractive destination for laundered funds but also a channel through which proceeds of crime are being laundered.The alert specifically cautioned realtors, mortgage issuers, and other industry stakeholders to be vigilant about the use of straw buyers who act as intermediaries in sales. It also flagged the suspicious use of private lenders for property purchases outside traditional financial institutions without logical explanations and the practice of "assignment contracts"—where property titles are flipped multiple times to different buyers or investors before construction is even completed."Instances observed include multiple incoming electronic funds transfers structured below currency restrictions imposed by other countries such as China and Iran and sent to individuals in Canada, which are then invested in real estate," the alert noted, without providing further details.FINTRAC emphasized that tax evasion and money laundering often intersect, as criminals use various laundering mechanisms to conceal the true source of funds. Additionally, the funds invested in real estate may be derived from other illicit activities, such as drug and human trafficking, and are therefore also subject to taxation.Since 2020, the federal government has introduced several regulations requiring identity verification of buyers. Brian Santos, then-chair of the Ontario Real Estate Association’s government relations committee, testified at a 2021 Commons finance committee hearing, stressing the need to "get dirty money out of the real estate market.""Money laundering is a multi-billion-dollar problem in our housing market," said Santos, a broker from Waterloo, Ontario. "It contributes to crowding out hardworking families looking to achieve their dream of one day owning a home. Realtors do not want to see a single dollar of dirty money competing against hardworking young families in our housing market."The Department of Finance has mandated that realtors, mortgage brokers, and title insurers "determine and verify the identity" of buyers and prohibit the completion of financial transactions until the beneficial owner has been identified. These rules apply to transactions of $100,000 or more.James Cohen, executive director of Transparency International Canada, previously highlighted a significant regulatory gap, noting that the lack of reporting in real estate has allowed "some realtors [to] look the other way" when dealing with cash customers.
Canadian real estate is increasingly being used to launder dirty money, according to a recent warning from a federal agency, says Blacklock's Reporter. The Financial Transactions and Reports Analysis Centre (FINTRAC) has issued an Operational Alert, urging caution over suspicious activities in the real estate sector, including the flipping of titles on unbuilt condominiums."Canada’s real estate sector is used by criminals to facilitate tax evasion and money laundering," stated FINTRAC. The agency highlighted that Canadian real estate is not only an attractive destination for laundered funds but also a channel through which proceeds of crime are being laundered.The alert specifically cautioned realtors, mortgage issuers, and other industry stakeholders to be vigilant about the use of straw buyers who act as intermediaries in sales. It also flagged the suspicious use of private lenders for property purchases outside traditional financial institutions without logical explanations and the practice of "assignment contracts"—where property titles are flipped multiple times to different buyers or investors before construction is even completed."Instances observed include multiple incoming electronic funds transfers structured below currency restrictions imposed by other countries such as China and Iran and sent to individuals in Canada, which are then invested in real estate," the alert noted, without providing further details.FINTRAC emphasized that tax evasion and money laundering often intersect, as criminals use various laundering mechanisms to conceal the true source of funds. Additionally, the funds invested in real estate may be derived from other illicit activities, such as drug and human trafficking, and are therefore also subject to taxation.Since 2020, the federal government has introduced several regulations requiring identity verification of buyers. Brian Santos, then-chair of the Ontario Real Estate Association’s government relations committee, testified at a 2021 Commons finance committee hearing, stressing the need to "get dirty money out of the real estate market.""Money laundering is a multi-billion-dollar problem in our housing market," said Santos, a broker from Waterloo, Ontario. "It contributes to crowding out hardworking families looking to achieve their dream of one day owning a home. Realtors do not want to see a single dollar of dirty money competing against hardworking young families in our housing market."The Department of Finance has mandated that realtors, mortgage brokers, and title insurers "determine and verify the identity" of buyers and prohibit the completion of financial transactions until the beneficial owner has been identified. These rules apply to transactions of $100,000 or more.James Cohen, executive director of Transparency International Canada, previously highlighted a significant regulatory gap, noting that the lack of reporting in real estate has allowed "some realtors [to] look the other way" when dealing with cash customers.
