Every year in Canada over $40 billion CDN is laundered through real estate transactions. Over $130 billion CDN is laundered in Canada every year, but over $40 billion is being laundered via real estate because it is so easy to launder money via real estate.
And the real estate brokerages are in on it.
So how does it work?
#1. Get lots of dirty money by being a criminal.
#2. Hire a lawyer with no ethics who doesn't ask a lot of questions.
#3. The lawyer sets up a dummy corporation that can be used to buy and sell properties, using cash.
#4. Find an unethical real estate broker or brokerage who won't report suspicious behaviour and doesn't ask questions.
#5. Pay in cash.
#6. Later sell the property and get paid via electronic transfers to your bank account. That money is now "laundered".
It is stupidly easy to do too, and while it is illegal to launder money, the above steps aren't actually illegal (except for #1 obviously) and there is no laws requiring lawyers or real estate brokers to report suspicious behaviour.
So how does this effect YOU???
Well, it means that a percentage of houses in Canada every year are bought up by criminals who can outbid you easily because their primary goal is to launder the money.
It means that real estate prices in cities like Toronto and Vancouver frequently go up by 5% or more annually (purely from criminals driving up prices).
And as noted in the video above, 5% per year is the difference between a $1 million house selling for $1.65 million after 10 years of ballooning prices.
So this is actually a huge problem and it is contributing to Canada's real estate bubble.
And when that bubble bursts it will be home owners who end up getting hurt the most, not the criminals.