VANCOUVER—Perched on the top of a glass tower in Vancouver’s Coal Harbour neighbourhood, the 6,459-square-foot condo is a glittering glass mansion in the sky, featuring two-storey-high windows with stunning views of the North Shore mountains, four bedrooms, three bathrooms, and a walk-in closet as big as some studio apartments.

Penthouse 1, at the top of the Fairmont Pacific Rim on Cordova St., is worth $28-million, making it the third most expensive condo in Vancouver. Who owns it is a mystery. Land title documents show the property is owned by a company called Leemar Investments FZE, registered in a low-tax, free-trade zone called the Jebel Ali Free Zone in the United Arab Emirates, and that the current owner didn’t use a mortgage to buy the property.

Vancouver-based lawyer Richard Goluboff, who signed title transfer documents for the property in 2013, did not respond to requests for comment.

Experts say this kind of secretive ownership is a problem when it comes to tackling tax evasion and money laundering. In British Columbia, property owners can shield their identity by arranging for family members to hold property titles; by creating holding companies where the sole director is an intermediary, like a lawyer; or by using offshore companies or trusts in tax havens that do not share information about company ownership.

All these shields can conceal the source of the money used to pay for properties, and it’s a common practice, especially for the most exclusive addresses. A 2016 report by the anti-corruption advocacy group Transparency International Canada found nearly half of B.C.’s 100 most expensive properties used corporate structures that concealed the owners’ identities.

The provincial government has proposed legislation that would make B.C. the first jurisdiction in Canada to lift the veil on secretive property ownership and create a public registry showing “the individuals who fundamentally own and control the land.”

The move comes after revelations that billions in “dirty money” from the proceeds of crime were likely laundered through the province’s casinos for years; the province is now probing the extent of suspected money laundering in the real estate industry.

B.C.’s high-value real estate sector is also at risk of being used for tax evasion, according to the Canada Revenue Agency. Between April 2015 and December 2018, the agency recovered $310-million in taxes from auditing activities related to real estate in B.C., compared to $547-million recovered in Ontario, a province that has nearly three times as many residential properties as British Columbia.

“The only way money laundering can occur in the real estate sector is being able to hide or conceal who the actual owners are,” said Garry Clement, a former RCMP officer who served on the force for 30 years and retired as the national director of the force’s proceeds of crime unit. He still works in the field as a private investigator.

“We had lots of cases where real estate, or other high-value items such as luxury cars, fairly valuable paintings, and jewelry were all part of the money-laundering cycle for organized crime groups.”

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Clement said B.C.’s proposed registry is a step in the right direction, and described the challenge investigators face when trying to track the flow of money through real estate. “If I set up an (offshore) shell company, the bottom line for law enforcement is it requires a mutual legal assistance treaty to get all the details on it. At least by the government saying, ‘you have to disclose who’s behind it,’ it should make the job easier.”

Ron Usher is general counsel for the Society of Notaries Public of B.C., which regulates and supports public notaries in the province. He thinks the registry is a good idea to ensure taxes are being paid, but warned against “demonizing” the use of corporations and trusts to hold land titles.

For instance, trusts are often used in complicated family situations, such as a second marriage where the original landowner wants to provide for his or her children, but also ensure their spouse can continue living in the house, Usher said.

Using a corporation to hold land title is a way to avoid paying B.C.’s property transfer tax, because instead of transferring the land through a sale, the corporation’s owners can sell the company. But Usher said there is a tradeoff: using a corporation means the owner can’t take advantage of the capital-gains exemption that applies to homeowners when they sell primary residences.

In some respects, B.C.’s system has become more secretive over time. Usher said it used to be possible to look up the shareholders of any company, but that information was made private through a changes to B.C.’s Corporations Act in 1996.

“That could be restored very easily if we want to know who lies behind a corporation,” he said.

In a white paper about the proposed legislation, Ministry of Finance staff said a public registry could help tenants and contractors who don’t always know who owns the building they live in or are working on.

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B.C. is following similar movements in other jurisdictions, like the United Kingdom and the European Union, to open up hidden property and company ownership in an effort to combat tax evasion and money laundering.

After the U.K. created its company ownership registry in 2016, an analysis by several transparency groups found 3,000 had companies with addresses in tax havens listed as owners, which is not allowed under the new corporate transparency rules. The analysis also showed that 19 senior politicians, 76 people from the U.S. sanctions list and 267 disqualified directors appeared to be listed as beneficial owners of U.K. companies, based on matches of names and month and year of birth.

Clement warned that B.C.’s registry won’t be effective unless other Canadian juridictons also follow suit, or illicit money will simply travel to provinces that have weaker rules than B.C.

B.C. Finance Minister Carole James says her ministry has been working with the federal government and other provinces and territories to require the same kind of transparency from corporations registered in other parts of Canada.

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