VANCOUVER (Reuters) - British Columbia said on Thursday that it had launched a probe into money laundering in its real estate market following widespread concerns that illegal activity may have helped inflate housing prices in Canada’s most expensive province.
The probe will be two-pronged, with the Ministry of Finance looking at systematic risks that make real estate and financial services vulnerable to money laundering, and the Ministry of the Attorney General investigating specific cases to understand how money launderers operate in the province.
The real estate probe follows a similar inquiry into casinos in the West Coast province, which found evidence of large-scale, transnational money laundering, notably in the Vancouver area, and raised concerns dirty money was filtering into housing.
Finance Minister Carole James said in a statement that the probe was necessary due to loose regulation that had led to “rampant speculation and out-of-control prices” in real estate.
“Our overheated housing market can attract criminals and people wanting to abuse the system,” she said. “When these people exploit loopholes, they drive up housing prices and help organized crime and drug dealers.”
The average home in the Vancouver area now costs C$1.1 million ($843,688), having jumped 76.7 percent over five years from C$612,900 in August 2013, according to data from the Real Estate Board of Greater Vancouver.
Housing prices have softened slightly in recent months on new taxes and rules introduced by the ruling New Democrats as part of their wide-ranging plan to boost affordability in Canada’s westernmost province.
Final reports on the two avenues of inquiry are due to government by March 2019.
Reporting by Julie Gordon in Vancouver