VANCOUVER—British Columbia’s newly announced review of real estate regulators in the province should examine how money laundering and shady transactions were allowed to fester as the housing market skyrocketed, according to a local realtor.

The finance minister Carole James announced Wednesday that an independent review led by former civil servant Dan Perrin will scrutinize oversight of the lucrative industry.

“I don’t see anything wrong with the province looking at making sure this is a well-policed industry,” said Tom Davidoff, an economist at the University of B.C.’s Sauder School of Business. “An uncertain and growing rapidly market is one in which you’re going to have shenanigans, given the forces driving up prices in Vancouver.”

“Making sure people play by the rules is great.”

James was unavailable for an interview due to health reasons Thursday, but in an email a spokesperson quoted James saying the relationship “is not working” between B.C.’s Office of the Superintendent of Real Estate and the province’s Real Estate Council, due to 2016 reforms by the previous B.C. Liberal government “which may not have been fully thought-through.”

“Given the state of B.C.’s housing market, it is critical that our regulators are working together to strengthen consumer protections,” James said in the statement. “Both the regulators themselves and stakeholders have raised concerns ... We want to ensure that B.C.’s real estate regulation is effective.”

Real estate in the province, particularly in the Lower Mainland, has become one of the most controversial topics as housing prices and rents exploded in recent years. A series of exposés in the Globe and Mail and Global News have alleged organized criminals use real estate transactions and loans to launder proceeds of crime. And there have also been cases of unscrupulous realtors exploiting the secrecy of property transactions to flip homes and profit without sellers’ knowledge.

Davidoff said any moves to increase regulations need to come with teeth, including higher penalties against rule-breakers, and the industry should be pushed to make more data on transactions available.

In a recent testimony before the federal Standing Committee on Finance, B.C. Attorney-General David Eby warned parliamentarians his government needs Ottawa’s help reining in “the colossal nature of the regulatory failure that took place and, frankly, may still be taking place in British Columbia.”

Vancouver has “become infamous for money laundering,” he testified on March 27, so much so that international organized crime experts call it “the Vancouver model.” And Eby described “an increasing lack of confidence in B.C. around the enforcement of laws related to tax evasion, and the enforcement of laws related to the laundering of money.”

“We need to be able to answer the question of where the money in our housing market is coming from,” he said.

Outrage over such allegations led the previous B.C. Liberal government to take oversight away from the local boards and the provincial council in 2016, handing top-level authority to a real estate superintendent.

“The regulator was appointed by Clark when she was scrambling for relevancy on the housing file leading up to the election,” said realtor Keith Roy, a Vancouver-based RE/MAX agent, in a phone interview. “Now you’ve still got a government responding to polls, implementing policy based on polling data. There’s no comprehensive approach in what they’re trying to do.”

On the question of the behaviour of realtors, however, Roy said though there are “some bad people” in any profession, and many of those caught breaking the law in shady transactions are often working for new, massive brokerages with little supervision or local knowledge of law or language.

“Generally speaking, you can see a common theme among the individuals who are continually published as having been in trouble, the realtors who are being caught on this stuff,” he said. “You protect the public by increasing the caliber of people; the barrier to entry needs to be drastically increased.”

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Meanwhile, Friday at 6 p.m. is the deadline for the public to offer input into the real estate superintendent’s proposed rule changes for realtors, announced a month ago.

The Superintendent and Real Estate Council of B.C. were unavailable for interviews Thursday.

David P. Ball is a Vancouver-based reporter at StarMetro, covering democracy and politics. Reach him by email or @davidpball.

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