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Canada  

Money laundering wake-up

The authors of a report that found $47 billion was laundered across Canada last year debated whether to include a graph that indicated Alberta, Ontario and the Prairies were hotspots for dirty money.

Maureen Maloney said her expert panel used the best mathematical model available to reach the estimates, but it's more reliable at a national level than a provincial one, so they questioned whether to publish the figures.

"But we thought, 'No, we need to do this, because people need to know it's not just a B.C. problem,' " said Maloney, the province's former deputy attorney general and a public policy professor at Simon Fraser University.

"It's a big B.C. problem, but it's everybody's problem. And to the extent that B.C. starts fixing our problem or at least makes our province less enticing to money launderers, they're going to go elsewhere. They're not going to disappear."

The report, one of two recently released by the B.C. government, aimed to sound a nationwide alarm about money laundering. But some provinces have reacted with skepticism, as Alberta questioned the numbers and Ontario said it will monitor the issue.

Maloney said there is no reliable data on money laundering in Canada, so the panel used what's known as the gravity model, which estimates the flow of dirty money between countries based on characteristics including GDP per capita and crime rates. 

The panel estimated that Alberta led the country for money laundering in 2015 with $10.2 billion, followed by Ontario with $8.2 billion and the Prairies — Saskatchewan and Manitoba combined — with $6.5 billion.

To the surprise of many, B.C. came in fourth with $6.2 billion, scuttling its reputation as the money laundering capital of Canada.

The authors noted that the relatively high estimates in Alberta and the Prairies might arise from the importance the model places on crime rates and GDP levels, which were high prior to the oil downturn.

"If money laundering in Alberta and the Prairies have been overestimated ... that implies that money laundering in B.C., Ontario and Quebec have likely been underestimated," the report said.

Still, the panel concluded that money laundering is corroding "the very fabric of society" across Canada, and laid out a vision for it to become a national priority. Multiple recommendations call for the B.C. government to persuade its provincial and federal partners to take action.

Other provinces have yet to confront the issue with the zeal of B.C., which announced this week it will hold a public inquiry.

Alberta Justice Minister Doug Schweitzer said the province takes criminal activity seriously, but the figure presented in the report is the product of modelling that may not be completely reliable.

"We use intelligence from front-line law enforcement agencies, not data we can't verify. We will continue to work with our law enforcement partners to protect law-abiding Albertans," he said in a statement.

Money laundering is nearly impossible to quantify because, by nature, it's hidden, but the report's estimate for Alberta seems high, said Greg Draper, a national lead of valuations, forensics and litigation support with law firm MNP LLP and a former RCMP investigator based in Calgary.

"I would expect that Vancouver has a bigger issue than Alberta, which is not to say that Alberta does not face its own money laundering risks," he said, adding illicit money is being washed through the province's casinos, housing and cash businesses.

Ontario's real estate association was so alarmed by Maloney's report that it contacted its provincial government to call for a beneficial ownership registry. B.C. has already announced plans for such a registry, which collects the names of people buying property using corporations, trusts and numbered companies.

"Today, drug lords, gun runners and other criminals can hide behind the veil of Canada's privacy laws," said Tim Hudak, chief executive officer of the Ontario Real Estate Association and a former provincial Progressive Conservative leader.



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