Justice Austin Cullen, commissioner for the independent Commission of Inquiry into Money Laundering in British Columbia, hinted Monday that his team will specifically address trade-based money laundering, the ability to act on evidence of wrongdoing and the impact of criminal proceeds on the B.C. real estate market.
The commission heard opening statements from lawyers for the provincial and federal governments on the first of three hearing days this week. This week is the first of several weeklong hearing intervals to the end of the year.
If the first day is any indication, the inquiry will be a slow grind through complex matters related to government legislation, regulatory oversight and enforcement efforts.
“I think we’ll be hearing evidence that it’s a pretty elusive issue and one that’s difficult to bring down to the ground,” said Cullen.
Both senior governments largely outlined their existing efforts to address money laundering.
B.C. government lawyer Jacqueline Hughes opened by noting that “the Lower Mainland has earned an international reputation for money laundering,” and asked, “Was there wilful blindness to what’s going on?”
She said the government hopes the commission can address that question and many others over the course of the year.
Hughes’ statement focused on two key areas: government-regulated gambling and the real estate industry.
Judith Hoffman, general counsel for the federal government, began by saying the inquiry is a provincial one but money laundering “obviously has many federal dimensions.” Ottawa is assisting the inquiry to understand the scope of the problem in B.C. and the effectiveness of federal enforcement, she said.
Hoffman said new federal regulations are coming for foreign virtual currencies that have yet to face the kind of regulations that govern credit cards or bank accounts. Likewise, cryptocurrencies present similar oversight issues.
Cullen interjected at one point to note that the commission may want to specifically look at trade-based money laundering and may seek federal help in better understanding current efforts to address it.
Hoffman addressed a maze of federal agencies whose work falls under the umbrella of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The Financial Transactions and Reports Analysis Centre (FINTRAC) “has an enormous mandate,” with upwards of 25 million reports annually, Cullen said.
“I am interested in perhaps turning Canada’s attention to that,” he told Hoffman.
Hoffman noted the interconnected roles of FINTRAC, RCMP, the Canada Revenue Agency, the Canadian Security Intelligence Service and the Office of the Superintendent of Financial Institutions, which regulates banks and money service businesses. The Canada Mortgage Housing Corp. also plays a role as the federal regulator of housing policies.
Using money service businesses as an example, Hoffman explained how the RCMP’s Combined Forces Special Enforcement Unit is working with the B.C. Attorney General and City of Richmond on a provincial licensing program.
Both senior governments are looking at new regulations for greater transparency in business ownership.
Hughes spoke about B.C.’s ongoing public consultation process to create a provincial public registry of corporate beneficial ownership, as it has done for property ownership – key recommendations of the Expert Panel on Money Laundering in Real Estate, commissioned by the province in 2019.
That panel provided a broad picture of money laundering in B.C., estimating that between $800 million and $5.3 billion was cleaned through B.C. real estate in one year.
The Cullen inquiry has been spurred largely by the perceived impact of dirty money on the real estate industry and its impact on B.C.’s middle class. Furthermore, as noted by Hughes, criminal proceeds from the opioid crisis are flowing through casinos and ending up in real estate.
The BC NDP government has created a new Crown agency to regulate the real estate and finance sectors in the province – the B.C. Financial Services Authority, which now controls the formerly independent role of the superintendent of real estate.