Organized crime, money laundering, and the real estate market in Canada

Abstract

This article examines how the financial proceeds of organized criminal activity are laundered through the Canadian real estate market. The source of data for this study was cases from the Royal Canadian Mounted Police. Real estate has many attributes that make it an attractive destination for criminal proceeds. It provides a home in which the offender can live and is often used for the cultivation of marijuana. As a money laundering vehicle, a host of mechanisms commonly used with real estate transactions can frustrate efforts to unearth the criminal source of funds, such as nominees, fake mortgages, solicitor–client privilege, and legal trust accounts. There is some potential that money laundering through real estate can distort fair market values by contributing to inflated real estate prices, but this is unlikely given the fact that the volume of criminal proceeds invested in the real estate market is just a tiny fraction of overall investments and transactions on an annual basis.

Keywords:

• Crime
• organized crime
• financial crimes
• proceeds of crime
• money laundering

Notes

Criminal Code of Canada, R.S., 1985, c. 42 (4th Supp.), s. 462.3; Controlled Drugs and Substances Act, R.S. 1996, c. 19, s. 8; Customs Act, R.S., 1985, c. 1 (2nd Supp.), s. 163.1; Excise Act R.S. 1985, c. E‐14, s 126.1.

Criminal Code of Canada, R.S., 1985, c. 42 (4th Supp.), s. 462.31; Controlled Drugs and Substances Act, R.S. 1996, c. 19, s. 9; Customs Act, R.S., 1985, c. 1 (2nd Supp.), 163.2; Excise Act, R.S. 1985, c. E‐14, s. 126.2.

The Expert Witness Program includes members of the RCMP, as well as provincial and municipal police agencies assigned to the Integrated Proceeds of Crime Units, who are to be designated as experts in money laundering for court purposes.

This figure is skewed upward because included in the random sample were at least 10 cases involving undercover currency exchange companies set up by police.