Last week, a panel of three academics established by British Columbia’s Minister of Finance released a report exploring the role that money laundering played the province’s real estate market.
The report found that money laundering had likely inflated B.C. housing prices by five per cent.
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The 184-page report details the methods and assumptions used to estimate the amount of money laundered in Canada and then further determines the amount laundered through real estate in B.C. In so doing, the report relies heavily on previous research on money laundering from other jurisdictions.
The report does not identify a single laundered dollar or an account with laundered money or even a single purchase of property using ill-gotten wealth. So how did the report come up with $7.4 billion in laundered money in B.C., of which it estimated $5.3 billion made it into real estate?
The report primarily relied on previous international estimates that stated that roughly two to five per cent of global GDP comprised laundered money. It assumed that the flow of ill-gotten wealth to Canada from other countries depends upon the attractiveness of the host country and the cultural affinity it may have with a source country.