Tag Archives: real estate agents

Will Canada Help Curb Haitian Corruption?

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Many Haitians fear for their safety and that of their family as their country slips into anarchic violence after the assassination of their president. But not Haitian Senator Rony Célestin and his family

Courtesy of the Canadian government, they are ensconced in the mansion pictured above. Located in the toniest of tony areas in Quebec, the couple recently settled on it for some $4 million.

 What did the Canadian government have to do with Célestin’s acquisition of the mansion? Everything. Célestin is a high-ranking official of a foreign country.  Any Canadian real estate agent or bank he contacted about buying the mansion was obliged by Canadian law to ask a simple question: How does a public official of one of the world’s poorest countries amass enough to buy such a luxurious home?  

If the July 11 New York Times story on the Senator and the mansion is correct, an inquiry would quickly have raised suspicions that the money did not come from a legitimate source. That in turn would have further obliged the real estate agent or banker to alert Canadian authorities.

Reports by the Financial Action Task Force and Asia/Pacific Group on Money Laundering have repeatedly warned Canadian officials that controls on money laundering in the real estate sector were toothless, that for years corrupt foreign officials have been hiding their money in Canada through the purchase of pricey real estate.  Indeed, in their latest, joint report, issued in 2016, the two flagged the rise of “criminally-inclined real estate professionals, notably real estate lawyers” to cater to the money laundering needs of criminals of all kind.

Is it too much to ask Canadian authorities to stop looking the other way when corrupt officials come to their country to shop for real estate?  Perhaps the picture of the Senator’s mansion juxtaposed with anyone of the thousands of Haiti’s poor might prompt action?  Canadian civil society, where are you?

When Transparency Isn’t the Answer: Beneficial Ownership in High-End Real Estate

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Earlier this month Transparency International UK published a report entitled “Corruption on Your Doorstep: How Corrupt Capital Is Used to Buy Property in the UK.” The Britain-specific recommendations are part of TI’s broader “Unmask the Corrupt” campaign, a call by TI, and echoed by others, to establish public registries of beneficial ownership. A similar call to unveil the individuals behind the shell corporations used to buy luxury condos in Manhattan garnered a lot of attention stateside during last month’s New York Times “Towers of Secrecy” series on the city’s high-end property market (see here, here, here, here, here, and here). The anticorruption rationale for mandating disclosure of real property beneficial ownership seems straightforward: As both the TI-UK report and the NYT series argue, buying real property in New York and London is an appealing way to launder stolen funds, because high-end real estate purchases allow a corrupt actor to inject millions of dollars into the legitimate market without having to deal with pesky anti-money laundering regulations, completing the purchases through shell companies that disguise the true beneficial owner. Requiring public disclosure of the beneficial owners of real property would in theory have two related benefits: First, requiring purchasers to reveal beneficial ownership information up front would dissuade some from using real property as a means of laundering money, and second, if law enforcement authorities have ready access to this information, it will make it easier to instigate and conduct investigations, as well as to seize assets later on.

Indeed, transparency in real property beneficial ownership seems like the kind of thing all anticorruption advocates should support, which is why it may seem a little counterintuitive when I say TI and others are taking the wrong tack. Pushing for central public registries of beneficial ownership of real property will not likely achieve the two objectives, and may have serious drawbacks. Here’s why: Continue reading →