The Liberals and the Conservatives are both promising to crack down on the criminals behind money-laundering schemes that are inflating housing prices in Canada’s big cities.
Housing has been a significant talking point in the federal election campaign. All parties are rolling out proposals to make it easier for Canadians to buy homes, include a Conservative plan to make mortgages easier to obtain and a Liberal promise to create more affordable housing.
But the Liberals and the Conservatives, who remain in a tough battle for first place, are also pledging to shut down the criminal enterprise that artificially drives up real estate values. And the Liberals say they will penalize foreign investors whose speculation in Canadian housing markets is adding to the prices increases.
A recent report prepared for the British Columbia government estimated that more than $5 billion of dirty money was laundered through B.C.’s real estate market in 2018, inflating the cost of buying a home by at least five per cent. That report also said the problem was huge in Ontario and on the prairies.
B.C.’s Attorney General, David Eby, asked the federal government to devote more resources to the issue after learning that the RCMP money-laundering unit in his province was operating on a skeleton staff and that criminals were not being prosecuted.
Conservative Leader Andrew Scheer responded to that call by promising that, if he is elected, he will launch an inquiry into money laundering in the real estate sector and will work with the industry to root out corrupt practices that inflate housing prices.
“Shady dealings have inflated prices in the Greater Toronto Area and Vancouver, and they must come to an end,” Mr. Scheer, whose party did not reply to requests for an interview, said this fall on a campaign stop.
The Liberals, meanwhile, say they will work with provinces, territories and communities to ensure that law enforcement and tax authorities have the tools they need to crack down on financial crime in the real estate sector.
They also say they will place a national tax on vacant residential properties owned by non-Canadians who don’t live in Canada, a measure intended to limit housing speculation by overseas investors.
The artificial inflation of housing prices by speculators and by the activities of criminal gangs is not a problem localized to Vancouver, says Bill Blair, the former Toronto police chief who is the Liberal candidate in Scarborough Southwest and who was the minister of border security and organized crime reduction in the previous Liberal government.
“The one thing that organized crime hates is sunshine,” Blair said in an interview. “If you could take away the opaque nature of these financial transactions, it really hinders their ability to launder their money.”
The Liberals, he said, are creating regulations that would provide law enforcement officials with the information about who is behind companies that invest in real estate. It would apply only to the federal sector, but the provinces and territories have indicated an interest in joining the effort.