A new report accuses the current registry of being largely toothless
According to a new report by C.D. Howe Institute, British Columbia’s new public land registry has critical flaws that will severely limit its ability to detect money laundering in real estat,.
First proposed in 2018, the initial version of the publicly accessible registry had robust provisions for the disclosure of beneficial ownership, along with strengthened licensing and conduct standards. The earliest iterations also had more stringent requirements, including business authorization for lenders, dedicated compliance management for employees, and full transparency/disclosure in transactions.
But in BC’s Public Registry to Combat Money Laundering: Broken on Arrival,
C.D. Howe asserts that subsequent changes have “stripped the highly touted public registry of almost all its potential power and functionality”, to the point that the version scheduled for roll-out this fall will be toothless when it comes to halting money laundering through BC real estate.
Author of the report, Kevin Comeau, says the most significant of the current land registry’s weaknesses is the lack of proactive verification of identification information for beneficial owners, “which renders that information of little value to law-enforcement agencies and other searchers of the registry.” Other major flaws include the registry’s “unreasonably restricted” information and the absence of a confidential tip line.
“As it currently stands, the information on the registry will be unreliable, difficult to access, difficult to process and, even if it helps a searcher spot a falsely declared beneficial owner, the ability to communicate that discovery to Canadian law-enforcement officials and their ability to leverage it to catch criminals will be curtailed,” Comeau said in a statement accompanying the report’s release.
Comeau recommends an identity verification system that will require filers to provide government-issued identification, such as passports or driver’s licences, to ensure beneficial owners actually exist. Keyword searches would also help narrow down the foreign countries involved in illegal financial activity in the B.C. real estate market.
The report recommends stiff punishment for those who file false information.
“To criminal organizations, fines alone are simply the cost of doing business,” Comeau writes. “Adding prison sentences would not only deter criminals from laundering their dirty money in B.C. real estate, it would increase the ability of law-enforcement agencies to negotiate plea deals with frontmen and false declarants in exchange for information to prosecute and convict perpetrators of the crimes predicate to money laundering (e.g., drug trafficking, human trafficking; political corruption and tax evasion).”
