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  • MONEY LAUNDERING AND REAL ESTATE PRICES IN VANCOUVER

    2018-02-21 10:32:36 Posted By Amir Hamzehali

     

    There was an investigation published by The Globe and Mail on Feb 16, 2018 saying that people connected to the fentanyl trade market are parking millions of dollars of their illicit money in the Vancouver-area property market in forms of private lending and mortgages.  

    The investigation states that drug dealers will loan their cash money earned from the sale of drugs to addicts to Chinese newcomers and students who put their Canadian properties up as a collateral. After the loan is secured by a mortgage, the borrowers wire loan payments to the private lenders’ account in China where the lenders or associates collect it as clean money to buy more fentanyl to ship to Canada! If the borrower fails to make loan payments, the private lender can file a claim against property in Canadian court. The lender could eventually collect debt plus interest as clean money in Canada when property sells.

    It’s terrible and alarming news for our real estate industry that criminals have found ways to launder their dirty drug money through our system! The consequences of these illegal activities on the real estate market are not clear yet.

    In my opinion, money laundering activities alone could not be a major cause for our high real estate prices! This cash money is not being loaned to borrowers to purchase properties in the first place, and it will not increase the market demand for real estate as a result! It is also quite unlikely that home sellers will accept cash money for the sale of their property as they could not walk into a bank with bags of cash. Bank representatives would be required to report this to authorities as suspicious.

    The major risk associated with this illegal loaning practice on our real estate market and our economy in the bigger picture is when homeowners borrow money beyond their means! These illegal financiers are unregulated and they loan their dirty money in forms of cash to home owners at extortionate levels of interests, sometimes as high as 120 percent per annum! Most of these borrowers speculate their property appreciations will cover these extremely high costs of borrowing but they may fail to make their mortgage payments and end up losing their property in court. This might be a great thing for criminals as they launder all their illicit money in Canada, but it would definitely be devastating both for the borrower and their neighbours when the property is sold in foreclosure.

    We should not blame the drug trafficking and money laundering as a major cause for our high real estate prices, but we definitely could blame our fast real estate price appreciations as a cause for attracting criminals to our city!!!

     



THANK YOU FOR YOUR TIME

AMIR Hamzehali
2397 Marine Dr.
West Vancouver
BC, V7V 1K9