Money Laundering in Real Estate - The Impacts of The Cullen Commission
The term money laundering often elicits dramatic images of suitcases stashed with wads of cash. However, many Canadians may be surprised to know that money laundering is a very real and hidden problem in Canada’s real estate market.
Recently, the province of British Columbia took its first step in addressing this issue.
The Cullen Commission
In 2019, Justice Austin Cullen was appointed under a broad mandate to inquire and report on money laundering in British Columbia. The 1800-page report, released on June 3, 2022, was compromised of extensive research, interviews and hearings. Specifically, the report identifies real estate transactions in British Columbia as ripe for abuse by money launderers, and identifies a number of substantive recommendations to address this.
How does this affect consumers?
The recommendations were made so that lawyers and other professionals, alongside their regulatory authorities could take proactive measures to avoid being a dupe to real estate fraud. However, consumers should understand the impact that this may have on them too if Ontario follows British Columbia’s example. Two examples of this are:
- Before a lawyer acts for you on a matter, they will have to verify your identity (that you are who you say you are). However, the Cullen Commission suggested that a more rigorous identification process may be necessary.
- Initiatives such as the British Columbia Land Owner Transparency Registry seeks to bring further transparency to the ownership of land. The Cullen Commission suggests further measures such as these.
Changes could be coming down the pipeline…
At the end of the day, the Cullen Commission was tasked with providing suggestions so that the province of British Columbia can begin to make the changes necessary to combat money laundering in the real estate market. The impact however, could reach far beyond the mandate of the commission. Ontario may choose to someday legislate these recommendations.
As a jurisdiction, Canada has been on the receiving end of significant criticism for being friendly to money laundering. The Cullen Commission and the Province of British Columbia has taken the first steps towards rectifying this situation, and it seems imminent that other Canadian jurisdictions will consider doing the same.
Read the report here.