Money laundering in Canada is a problem described by professionals in 2019 as a "national crisis," and which has attracted international attention.

Money laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions ...

has become such a significant part of Canada's domestic economy that anti-money laundering experts have associated two distinct types of laundering (

snow washing Snow washing refers to hiding illegitimate financial transactions often for purposes of tax evasion in Canada. The term is an amalgam of the words ''snow'' referring to Canada having cold snowy winters and ''washing'' referring to money launderi ...

and the Vancouver Model) with the country. As of July 2022, a

public inquiry A tribunal of inquiry is an official review of events or actions ordered by a government body. In many common law countries, such as the United Kingdom, Republic of Ireland, Ireland, Australia and Canada, such a public inquiry differs from a royal ...

is currently being held to gauge the extent of the problem.

Economic impact

Canada generates a significant share of its

gross domestic product Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...

(GDP) from money laundering. Canadian intelligence estimates $113 billion of funds are laundered annually, which works out to over 5% of GDP. This generates significant demand for goods that may otherwise be considered essential, such as housing.

Housing

Canadian housing is a frequently used tool for money laundering that often involves organized crime, according to

Criminal Intelligence Service Canada Criminal Intelligence Service Canada (CISC; french: Service canadien de renseignements criminels) is an inter-agency organization in Canada designed to coordinate and share criminal intelligence amongst member police forces. Established in 1970, th ...

, one of the country's intelligence agencies. The problem has become a global phenomenon in countries with high home prices and low levels of scrutiny for home purchases. However, Canada is uniquely targeted due to a lack of beneficial ownership, meaning the true owner of property is never collected by authorities.

Luxury vehicles

Canada's lack of vehicle purchasing regulations have made luxury passenger vehicles a common tool for money laundering. Luxury vehicles are purchased with illicit cash since payments are only regulated in some provinces, and then sold. The depreciation is a relatively small price to obtain clean money that can be deposited into a bank account with a clear source of funds.

Snow washing

Snow washing is the process of routing illegal activity through Canada to capitalize on its reputation as a “boring” and safe place.

The Vancouver Model

The ''Vancouver Model'' is the name anti-money laundering experts gave to a unique model observed in

Vancouver Vancouver ( ) is a major city in western Canada, located in the Lower Mainland region of British Columbia. As the List of cities in British Columbia, most populous city in the province, the 2021 Canadian census recorded 662,248 people in the ...

, Canada. It involves taking illicit cash earned through crime to a casino (often a VIP room), and gambling some of the proceeds.The chips are then cashed out of the casino as clean cash. To further obfuscate the funds in a money laundering process known as

layering Layering has evolved as a common means of vegetative propagation of numerous species in natural environments. Layering is also utilized by horticulturists to propagate desirable plants. Natural layering typically occurs when a branch touches ...

, the funds are then used to buy assets such as real estate. Once the real estate is sold at a profit, sometimes to a related party, the funds are considered legitimate (and often tax free) profit. A combination of Canada’s opaque ownership laws and low scrutiny on foreign investment makes it an ideal target.

References

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Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...