Close X
Monday, January 27, 2025
ADVT 
National

Bags Of Cash, Luxury Car Export Scheme Described In B.C. Money Laundering Report

Darpan News Desk The Canadian Press, 08 May, 2019 04:36 PM

    VICTORIA — An independent report suggests organized criminals are laundering money through British Columbia's luxury car sector and some are even receiving tax rebates from the province for the transactions.

     

    The B.C. government tasked former RCMP deputy commissioner Peter German in September to identify potential links between criminal enterprises and real estate, horse racing and luxury vehicle industries.


    Attorney General David Eby called the findings released Tuesday "disturbing confirmation" that money laundering is a problem in B.C. that goes beyond the previously identified channel of casinos.


    "In the luxury car market, there is no financial reporting of large cash purchases, no oversight of international bank wire transfers and no apparent investigation or enforcement," he said.


    "It's a recipe for exactly what's happened here: Vancouver becoming North America's luxury car capital generally, and perhaps since 2013, claiming North America's luxury car export capital title as well."


    In addition to gathering accounts of luxury car sales of up to $240,000 paid for with bags of cash, German uncovered a "huge" and complicated luxury-vehicle export scheme involving hundreds of so-called "straw buyers" in the grey market.


    Many of the straw buyers appear to be foreign students hired to purchase a car in Canada that will almost immediately be exported and re-sold in China, where dealerships charge more due to the tax structure and soaring demand. The role of a straw buyer is to insulate the true purchasers from contact with the seller, the report says.


    The purchasers pay provincial sales tax when they buy the car but apply for a refund when it's exported and the practice has grown exponentially, costing the province almost $85 million since 2013, Eby said.


    Before 2014, fewer than 100 vehicles a year received the refund. In 2016, the provincial sales tax was rebated on 3,674 vehicles and the surge in applications required the Finance Ministry to hire more staff, the report says.


    The source and destination of the tax refunds and any income tax reporting from these individuals or entities is unknown, but the conditions are ideal for money laundering, the report says.


    It's an unregulated grey market, with little know about the people or companies involved and where the money comes from, the report says.


    "It provides a wonderful opportunity for large-scale money laundering, with very little chance of detection."


    It's impossible to put a dollar figure on the amount being laundered through the luxury car sector, German said.


    Eby said he was shocked to hear about the refunds and the government is moving quickly to address the issue.


    "We have not waited to take action on this report."


    The Finance Ministry is reviewing the tax rebate program and details of allegations made in the report have been forwarded to police, the Insurance Corporation of B.C., and the Vehicle Sales Authority. The province is also preparing plans for regulation of the luxury car sector.


    The apparent growth in luxury car money laundering has coincided with other potential criminal activity and problems in the market, Eby said.


    "I note the remarkable correlation between the timing of the exponential expansion of this grey market export scheme, the exponential growth of suspicious cash transactions at B.C. casinos and the exponential real estate price ramp up on the Lower Mainland," he said.


    The report also found vulnerabilities in the horse racing sector with a lack of financial reporting requirements but no excessive issues related to money laundering.


    The report is one of two commissioned by the province in September amid what the government said was "widespread concern about B.C.'s reputation as a haven for money laundering."


    German was asked to look further into the problem after he concluded a review last June on money laundering in Lower Mainland casinos.


    Another report by an expert panel on money laundering recommends rule changes that would close loopholes in the real estate market and increase transparency around who owns property in B.C.


    Eby said that report, along with German's findings about the real estate sector, should be released in the coming days.


    In an entirely separate report also released Tuesday, the C.D. Howe Institute estimates Canada fails to catch money launderers 99.9 per cent of the time.


    The institute says in a news release that the protections against money laundering in Canada are among the weakest of Western liberal democracies.


    "While it is impossible to estimate the exact amount of money laundering, a realistic estimate of the magnitude of dirty money laundered in Canada each year likely lies in range of $100 - $130 billion,” report author Kevin Comeau says in the statement.

    MORE National ARTICLES

    Avalanche Warning Issued For B.C.’s South Coast, Island As Weak Snowpack Persists

    Avalanche Warning Issued For B.C.’s South Coast, Island As Weak Snowpack Persists
    Avalanche Canada says there is a weak layer in the snowpack that is about 50 centimetres deep, prompting a warning until Sunday.

    Avalanche Warning Issued For B.C.’s South Coast, Island As Weak Snowpack Persists

    Sell Regulated Heroin To Drug Users To Reduce Overdose Deaths: B.C. Group

    Sell Regulated Heroin To Drug Users To Reduce Overdose Deaths: B.C. Group
    The BC Centre on Substance Use is proposing a policy to sell legally regulated heroin as part of an urgent response to reduce opioid overdose deaths from a toxic drug supply that is profiting organized crime groups.

    Sell Regulated Heroin To Drug Users To Reduce Overdose Deaths: B.C. Group

    Few Incentives In Spending-Heavy B.C. Budget, Global Downturn Worries Business

    VICTORIA — British Columbia's budget pays too little attention to the potential impacts of a slowing global economy and a shifting housing market, business leaders say.

    Few Incentives In Spending-Heavy B.C. Budget, Global Downturn Worries Business

    Proposed Edible Pot Rules Are Wasteful, Would Leave Products Tasteless: Critics

    Proposed Edible Pot Rules Are Wasteful, Would Leave Products Tasteless: Critics
    Canada's proposed edible pot regulations would result in tasteless products wrapped in wasteful packaging, shutting out medical patients and fuelling a continued black market, critics say

    Proposed Edible Pot Rules Are Wasteful, Would Leave Products Tasteless: Critics

    Man Arrested, Charged In String Of Four Bank Robberies Over Four Hours In Surrey

    Man Arrested, Charged In String Of Four Bank Robberies Over Four Hours In Surrey
    Richard Orr, 24, Is Charged With Four Counts Of Robbery And Remains In Custody Following The Four-Hour Spree On Feb. 12.

    Man Arrested, Charged In String Of Four Bank Robberies Over Four Hours In Surrey

    Alcohol Policies Fizzle For Canadian Governments As Harms Overflow: Reports

    Alcohol Policies Fizzle For Canadian Governments As Harms Overflow: Reports
    VICTORIA — Two new studies say the federal and provincial governments must do more to reduce alcohol consumption after determining damages from drinking have surpassed tobacco use.

    Alcohol Policies Fizzle For Canadian Governments As Harms Overflow: Reports