Shutting down big-money laundering schemes run by criminals and kleptocrats has emerged as key to the West’s efforts to preserve democracy
It was just another darkly amusing local story that didn’t attract much attention. Or at least it didn’t attract the kind of scrutiny it would have, had Vancouver not already richly earned its reputation as a money-laundering hub for international swindlers, drug dealers and well-connected high rollers who have helped turn Canada’s Pacific coast into one of the most absurdly overpriced real estate markets in the world.
Last month, a local investigation by an independent media organization called Coastal Front revealed that a freedom-of-information request it filed a year earlier had obliged the City of Vancouver to disgorge 750 pages of documents showing that between 2012 and January of this year, city officials had accepted nearly 2,000 payments totalling $13.1 million for everything from property tax payments to municipal cemetery plots — all in stacks of cash.
In one case, back in 2014, a tax bill was paid with a big bag containing $47,000. In 2017, city staff accepted a property-tax payment of $44,463, all in cash. Each of the 1,905 payments recorded in the documents exceeded $5,000.
There was no rule requiring staff to ask a bag carrier for identification. There was no regulation requiring staff to report any of the weird transactions to anyone. There was no bylaw requiring a record of the payments to be passed on to the Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac — Canada’s financial intelligence unit.
It was only two years ago when city councillor Melissa De Genova brought a motion banning cash transactions in excess of $10,000 — the reporting threshold Fintrac requires of casinos, banks and real estate companies — that Vancouver took any notice. De Genova had learned of the bags-of-cash payment method only after she was approached one day by a man carrying a shopping bag stuffed with the stacks of cash who asked her for directions to the office in city hall where people paid their tax bills.
In another little-noticed story reported only three weeks ago — this one illustrative of the global reputation Canada has earned as an offshore bolthole for dubiously earned and circuitously stashed money — filings in federal court by Fintrac and the Canadian Border Services Agency outline a complex operation that appears to have moved more than $80 million from China via Hong Kong to the principals behind a Markham, Ont., startup that alternatively described itself as a tourism promotion venture, a property investment fund and a money-transfer firm.
That story, reported by the investigative journalist Sam Cooper, author of the bestselling Wilful Blindness – How a Criminal Network of Narcos, Tycoons and CCP Agents Infiltrated the West, begins with questions about how Zhang Guanqun, a 19-year-old foreign student attending a small college in Vancouver’s suburbs, managed to purchase a $2-million mansion shortly after arriving in Canada in 2012 with only $23,800 to his name.
The allegations surrounding the ultimate source of Zhang’s fortune should be taken with a grain of salt, since they’re outlined in a “ponzi scheme” fraud case involving bilked Chinese investors brought by the Chinese Communist Party’s notoriously untrustworthy Public Security Bureau. But the proximate source of the money was Zhang’s parents, the main players in that odd Markham enterprise.
Among the cast of characters in the story is Xin (Richard) Zhou, a former fundraising co-chair of the federal Liberal Party, community organizer for Prime Minister Justin Trudeau’s 2015 election campaign and “community outreach” worker for former Ontario premier Kathleen Wynne. In the court case involving Zhang’s parents, Fintrac noted Zhou’s suspicious account activity: With a stated income of $26,000, Zhou’s account showed transactions involving several million dollars, including a transfer of $2,999,985 from Zhang.
It’s all very intriguing, but why it all matters is that last year the federal Criminal Intelligence Service released what it called a National Criminal Intelligence Estimate on the Canadian Criminal Marketplace: Money Laundering and Fraud that reckoned the amount of dirty money making its way into Canadian real estate and other ventures at perhaps $133 billion annually.
In British Columbia, the Cullen Inquiry into money laundering has concluded after two years of lurid evidence detailing the way hundreds of millions of dollars has flowed from drug kingpins and dodgy “whale gamblers” from China into B.C.’s real estate and luxury vehicle markets via provincially-regulated casinos — hockey bags full of cash, in many instances captured by CCTV cameras. The inquiry is scheduled to release its final report next May. But this is not just a British Columbia phenomenon. It’s countrywide, and Canada’s place is dropping on Transparency International’s global corruption rankings.
The Trudeau government has made a series of commitments flowing from U.S. President Joe Biden’s Summit for Democracy, convened in Washington last week. A document outlining those commitments gives the distinct impression that its authors were instructed to avoid addressing any of the real-world threats to democracy that have crippled, perhaps fatally, the “rules-based international order” the Trudeau government has consistently claimed to champion.
In meeting the global threats to democracy posed by belligerent and hostile police states and authoritarian regimes such as China and Russia, the world’s democracies are being called on to clean up their own acts. Shutting down big-money boltholes and laundering schemes run by gangsters, kleptocrats and the cronies of the worlds’ dictators has emerged as central to Summit’s agenda.
Ottawa’s commitments “represent a broader resolve by Canada to strengthen democracy,” the document claims, and they will be implemented “as part of a year of action in consultation with stakeholders, including civil society.” Most of Trudeau government’s promises are not new, and it still won’t be until 2025 that Ottawa expects to have a “beneficial ownership” registry in place. A publicly-accessible registry would reveal the real owners behind all the shell outfits and numbered companies operating in Canada. But at least that Canadian commitment has been made in the presence of more than 100 countries invited to the Summit. That’s something.
“At least it’s a start,” James Cohen, executive director of Transparency Canada International, told me. “It’s a start.”
Terry Glavin is an author and journalist.