This is the best place to start in fighting off the influence of illicit foreign money
The creation of a beneficial ownership registry is one of the most effective ways to fight money laundering in Canadian real estate, according to Ontario Real Estate Association CEO Tim Hudak.
In a recent contribution to the Toronto Sun, Hudak noted that such a public database would make it easier to determine a property’s ownership, thus ensuring much improved transparency and accountability.
“It would allow law enforcement, tax authorities, media and everyday citizens to search for properties of corrupt officials, their families or people they may know who are involved in money-laundering crimes, and better connect money from criminal acts overseas to property purchased in Canada,” Hudak wrote.
Said system would compel companies, trusts, and partnerships to disclose beneficial owners, most particularly controlling shareholders and partners.
Fortunately, the infrastructure to readily implement such a registry is already in place, the OREA chief assured.
“Teranet, the exclusive provider of Ontario’s online property search and registration, already operates one of the most advanced, secure and sophisticated land registration systems in the world. To add the Beneficial Ownership Registry to its current platform would be a smart move to further increase transparency in housing transactions.”
Hudak cited research by Transparency International Canada, which found that since 2008, more than $28.4 billion worth of homes in the GTA alone were bought by shell companies.
“The problem is we don’t know how much of this money comes from legitimate businesses and how much are anonymous front companies hiding laundered money,” he stressed. “What we do know is the dirty money coming into our housing market is competing against hard-working young families trying to buy homes — and that has to stop.”
Hudak’s comments mirrored those of former RCMP top investigator Henry Tso. Earlier this year, Tso warned that Canada’s justice system currently has significant loopholes – most notably, toothless prosecution, feeble sentencing, and insufficient resources for law enforcement – that promote the growth of fraud as a business.
“Currently, weak corporate transparency rules in Canada allow criminals to hide behind anonymous shell companies and wash large amounts of money through housing. That’s because shell companies are permitted to buy homes without disclosing the names of the beneficial owners — those who enjoy the benefits of ownership even though the title of the property is in someone else’s name,” Hudak stated.
