With billions of dollars in dirty money being laundered through Toronto real estate each year, realtors are questioning why Ontario hasn’t taken action to implement the simple reform that’s chased criminals out of overheated property markets around the world: requiring the real owners of property to identify themselves.

The U.K. and the U.S. have brought in ownership registries to force those who own property via numbered companies and trust funds to reveal their true identities. British Columbia will soon implement one of its own.

“Ontario realtors don’t want to see a single dollar of dirty money coming into the housing market,” said Ontario Real Estate Association CEO Tim Hudak. “When criminals hide their money here, it drives the price of real estate out of reach for regular Ontarians.”

Hudak said a beneficial ownership registry for property in Ontario is “well past due.”

“Back in the day, there may have been a reason to protect corporate privacy, but to think that drug dealers and arms dealers are recycling their cash in our province … a reform like this is a no-brainer.”

Hudak’s comments were echoed by the Toronto Real Estate Board (TREB), which said the current land registry allows property owners to use companies or trusts to remain anonymous.

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“TREB would welcome a discussion with other housing market stakeholders, including government, about requiring beneficial owners of real estate to identify themselves to land title authorities,” said CEO John DiMichele said in an emailed statement.

A spokesperson for Ontario Finance Minister Vic Fedeli said a registry was discussed at the last meeting of provincial finance ministers. “It’s something that we’ll continue to monitor,” wrote Robert Gibson in an email.

Registries have proven effective in discouraging criminals, who buy homes through numbered companies and with cash to make it difficult or impossible to trace the origin of funds. Cash purchases of luxury real estate by anonymous companies plummeted 70 per cent in areas where the U.S. Department of Justice imposed a requirement that purchasers reveal their identities.

But in Canada, the lack of transparency attracts organized crime from around the world.

“Canada still has the welcome mat out for dirty money,” said James Cohen, the executive director of Transparency International Canada. “We’re still asleep at the wheel on this issue. There might be a mentality that this is an issue that resides on the other side of the Rocky Mountains, but it’s a pan-Canadian issue.

“It’s time for Ontario to implement beneficial ownership registry of land.”

Over the last few months, the staggering scale of money laundering in the Toronto and Vancouver real estate markets has come into focus.

Last week, a pair of reports commissioned by the British Columbian government used uncharacteristically frank language to condemn government complacency.

“It is both an embarrassment and a threat to a society that adheres to the rule of law, for organized crime to take advantage of all that is good in our society and subvert it for pecuniary advantage,” states the report prepared by former RCMP deputy commissioner Peter German.

German’s team found 90,000 homes owned anonymously through corporations in the province, one third of which were bought with cash. In the second report, three B.C. academics estimated that at least $5 billion was laundered through B.C. real estate last year alone.

“Requiring beneficial owners to be identified for all properties … would make money laundering in B.C. a much less desirable business,” the report states. “Taking legislative steps to make B.C. companies more transparent would make them less vulnerable to money laundering and other criminal activity.”

B.C.’s beneficial land ownership registry is slated to go live this year.

Far from being a victimless crime, money laundering has actively contributed to the housing crisis, locking out a generation of Canadians from home ownership as property prices skyrocket.

“To ask if (money laundering) has impacted housing prices in certain communities of the Lower Mainland is really a rhetorical question,” the German report states. “Of course it has.

“The infusion of money into the B.C. economy from abroad led to a frenzy of buying, which in turn raised the assessed value of homes in large swaths of Greater Vancouver.”

Sasha Caldera, a campaign manager with Canadians for Tax Fairness, said the link between money laundering and the affordability crisis in housing is plain to see.

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“We know that money laundering has contributed to an increase in real-estate prices in Vancouver,” he said. “And given the money laundering activity in Toronto, it likely plays a role here as well. It’s just a question of how much.”

Caldera said he reached out to Attorney General Caroline Mulroney to discuss ways to crack down on money laundering, but she would not meet with him.

At a news conference announcing the release of the report, B.C. Finance Minister Carole James described how she had recently visited Ontario and spoke with business leaders who told her they were worried about money laundering in real estate and wanted to know more about B.C.’s approach.

“The fact that there are Ontario businesses looking to the leadership of B.C. is a sign that the government here in Ontario needs to take this seriously,” said Transparency International’s Cohen.

In March, Cohen’s organization released a similar survey of the real-estate market in the Greater Toronto Area. It found 50,000 houses were bought by anonymous companies with $20 billion in untraceable cash during the last 10 years.

In 2017, a Star/CBC investigation drawn from the Panama Papers revealed how Canada has become a tax haven, attracting money launderers and tax evaders from abroad.

Canada’s existing anti-money laundering law has some glaring holes that are exploited by criminals, including using cash to buy property, thus cutting mortgage lenders and banks out of the transaction.

Even though real-estate agents are technically required to report suspicious transactions, they are incentivized by commissions to look the other way. The Star reported last year that Canadian real-estate agents submitted suspicious transaction reports in less than 0.008 per cent of property sales made between 2013 and 2017.

Garry Clement, former national director of the RCMP’s proceeds of crime program, now trains bankers and other professionals — including real-estate agents — on how to catch money laundering.

He said he was shocked when he asked a room full of real-estate agents how many of them had ever accepted cash payments.

“The hands shot up,” he said. “They just didn’t see anything wrong with it.”

Even when they suspect something is fishy, real-estate agents don’t want to turn down big commissions.

“They haven’t taken (the money laundering rules) seriously,” he said. “This plays into the hands of organized crime.

“They’ll never get it right until some prominent agent or broker is walked out in handcuffs,” he said. “At some point, everyone has an obligation to put ethics ahead of profit.

“Let’s not be naive here, if you think Vancouver is the only city that has a problem. The difference is that Vancouver pulled its head out of the sand. Other cities need to catch up.”

Correction – May 14, 2019: This article was edited from a previous version that mistakenly said a report by former RCMP commissioner Peter German found that at least $5 billion was laundered through British Columbia real estate in 2018. In fact, that information comes from a report done by three B.C. academics.