Why Canada's money-laundering problem is far bigger than we think fpcomment
On May 9, an expert panel on money laundering issued its report, Combatting Money Laundering in BC Real Estate, in which it estimated 2018 money laundering in Canada at $46.7 billion. In a recent C.D. Howe Institute report, titled Why We Fail to Catch Money Launderers 99.9% of the Time, I estimate money laundering in Canada at $100 billion to $130 billion. Who’s right?
Let’s be clear. The report’s estimate of $46.7 billion is very conservative. And any misallocation of that amount among the provinces is not the panel’s fault. It’s Canada’s. That simplicity can accurately tell you how Canada compares to Haiti and Iran, but it doesn’t tell you how weak our laws are compared to other Western liberal democracies. And, as I argue in the C.D. Howe Institute report, that’s the most relevant determinant of our attractiveness to international money launderers. Criminals from corrupt and authoritarian regimes fear keeping their illicit assets in their home countries because someone closer to power may confiscate those assets.
The model doesn’t adjust for either of those key factors, which suggests its $46.7-billion national estimate is very low. That information would have indicated where the dirty money was likely coming from and which provinces were targeted most. And if the suspicious-transaction reports indicated a high level of dirty money was coming from authoritarian and corrupt regimes, such as China, Russia and several Middle Eastern countries, as opposed to a low corruption country such as the U.S., upward adjustments could have been made not only to the $46.
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