In light of a blistering report on money laundering in British Columbia, industry professionals have weighed in on how the problem can be curtailed.
While British Columbia ranks behind Alberta, Ontario and the Prairies in money laundering, $7.4 billion in ill-gotten gains made its way into the province in 2018, $5b of which went through real estate, resulting it an estimated 5% price surge.
Robert Mogensen, a broker with The Mortgage Advantage, says the government should tread carefully because consumers have already paid heavily and shouldn’t be further punished.
“I think that oversight is a good thing, but I’m not a big fan of government intervention, as far as taxes and regulations on residents go,” he said. “But I’m behind the foreign buyer tax, for instance, and behind more oversight with regards to establishing the source of cash for down payments from offshore buyers.”
Mogensen, furthermore, believes one course of action the government should take is proscribing trust accounts.
“I’ve talk to a lot of people about this over the last few years: The use of trust accounts by lawyers acting on behalf of foreign buyers, and buyers in general, to buy property and not disclose who the beneficial owner of the property is. That kind of regulation is highly necessary to slow down the process of laundering dirty money.”
Ron Antalek, a sales agent, concurs, stating that unidentified trust accounts should be outlawed.
“At REMAX, we never take anything in trust in a bank draft form, and we never accept cash and put it in a trust account anyway,” he said. “If the trust account is unidentified, we won’t accept it, and I believe that should be put in legislation.”
Moreover, Antalek says that provenance of funds is integral to keeping things above board.
“The company I work with never accepts cash deposits,” he said. “What we do is accept bank drafts only. By only taking bank drafts, the realtor world will protect itself from becoming implicated in money laundering.
“Money should only exchange hands if it’s authorized funding, and that would be through a lending institution or in a draft form. Realtors should never accept cash as a deposit, and if everything is in draft form and verified through lenders, it should do a lot to prevent money laundering.”