The capital flight of Chinese investment towards B.C.’s real estate market over the past few years should be looked at with a sceptical eye, according to a Queen’s University law professor.
In a recent contribution to The Globe and Mail, Arthur Cockfield argued that while some of these Chinese funds are entering Canada through legitimate channels and are used for entirely benign purposes, recent findings of anti-laundering authorities should not be ignored.
According to a report late last year by Denis Meunier of the C.D. Howe Institute, vulnerabilities in current laws and regulations are helping Chinese criminal organizations launder anywhere from $5 billion up to as much as $100 billion annually.
Investigators have found that much of the smuggling took place from 2015 onwards – a period that coincides with the results of an investigation by The New York Times, which found that “US$1 trillion recently left China in an 18-month time period around 2015-16.”
“Most of this money comes from wealthy Chinese individuals who secretly store away their legally earned money overseas. What began as a trickle 20 years ago has now become a tidal wave of capital outflows with stories of middle-class Chinese now opening bank accounts in Canada and the United States,” Cockfield wrote.
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More troubling are the established links of this illegal trade to the fentanyl crisis, the overdose of which has been estimated to lead to the deaths of around 4,000 Canadians per year.
“According to Canadian law enforcement, most of this fentanyl – including the deadly tainted version of the drug – is manufactured by and shipped from China-based factories through online sales to Canadian drug users and traffickers,” Cockfield stated.
“To launder these illegal sales within British Columbia, organized crime linked to China cleaned up $1-billion in 2016 alone; they did so by buying Vancouver real estate. An additional $1.7-billion was laundered between 2013 and 2017 by pumping money into casino earnings.”