Ownership registry needed to end ‘snow-washing’ in GTA real estate: experts

Billions of dollars in Canadian real estate transactions can be attributed to money laundering, which has driven the price of homes in the Greater Toronto Area up, according to those calling for more public information on who owns what properties.

“When people think about money laundering, they typically don’t think about Canada,” said James Cohen from Transparency International Canada. “They think about the Swiss Alps or the Cayman Islands.”

Cohen believes there’s an increasing need for a land ownership registry, which would provide a publicly accessible database that shows the owners of private companies investing in real estate.

The term coined to describe this issue is called “snow-washing,” said Cohen. “Bring your dirty money to Canada – it will be clean like the pure, white snow.”

According to a joint study published by the End Snow Washing coalition in 2019, different corporations acquired nearly $30 billion in GTA housing from 2008-2018. The majority of them were privately owned and no information on beneficial owners was provided.

Cohen believes the purchases made through numbered companies, with no external financing, could indicate serious criminal behaviour involving massive amounts of money.

“There’s nothing illegal about running an anonymous company or anonymous trust or buying real estate,” said Cohen. “There’s a lot of room in there for nefarious actors to park their dirty money in Toronto condos and use them as safety deposit boxes in the sky.”

During that same time period, the study also found at least $35 billion in residential mortgages in the GTA were provided by unregulated lenders.

“This type of obscurity is a risk for Canada and we need greater transparency,” said Sasha Caldera from Publish What You Pay Canada. “Other countries are already rolling out these kinds of registries. Canada has been quite slow to react and to develop this kind of registry.”

The federal government indicated in its budget last April that a new database with details on beneficial landowners is being planned and is expected to be complete by 2025.

British Columbia was the first province in Canada to introduce a land owner registry last year. It requires transparency reports be submitted with all new purchases being held for other interest holders. Those who had previously owned properties just had a deadline to report extended until the end of this month.

“Toronto is the second largest housing bubble in the world and Vancouver is the sixth largest housing bubble in the world,” said Caldera. “Money laundering in B.C. contributes to about 5% of the total price of housing.”

New legislation just being introduced by Ontario NDP MPP Jessica Bell would require corporations, trusts, and partnerships that own real estate to disclose individual owners. Fines of up to $100,000 could be issued if they failed to do so.

“Experts have been warning for years that home prices are being partially being driven up by investors who buy and sell homes in Ontario and Canada to store wealth, to launder money and cheat on their taxes,” said Bell.

The RCMP has also announced they would be investing $20 million over five years into divisional money laundering investigative teams.