Billions In Toronto Real Estate Bought Anonymously, With Funds of Unknown Origin

Looking to launder some cash? You might want to head over to Toronto, and use the real estate. A new Transparency International Canada (TI Canada) report studies the corporate ownership of Greater Toronto residential real estate. The organization took a dive through over 50,000 corporate purchases made from 2008 to 2018. Turns out at least $20 billion in buys were made with no checks and balances to determine the beneficial owners or source of funds.

Corporate and Beneficial Ownership

First you need to understand the issue with beneficial ownership in Canada. Beneficial ownership is the person/company that actually benefits from a company. Canada, much like any other tax haven, doesn’t keep track of beneficial owners. Instead, the government only collects a list of directors and a mailing address. Great from a privacy standpoint, but it can become problematic sometimes.

One of those times is when buying real estate. In Ontario, companies can register a title with only the name of the company, and a mailing address. There’s nothing else. We don’t note what country the company is registered, and the address can be a post office box. When combined with how they’re buying Toronto real estate, you can see how this is problematic.

Corporations Used $9.8 Billion In Cash To Buy Homes In Toronto

Using cash to buy Greater Toronto real estate is popular with companies. Looking at the 51,498 GTA homes companies bought from 2008 to 2018, $9.8 billion were all cash buys. That’s about 35% of the total dollar volume spent, with the volume accelerating right up to 2017. To contrast, just 11% of household volume made similar all-cash transactions.  The real estate industry would most likely tell you that’s a sign of market strength. After all, well capitalized companies are transferring money through banks with rigorous checks. What could go wrong?

Greater Toronto Residential Real Estate Bought by Companies

The dollar value of residential real estate sales to companies, with and without a mortgage.

Source: Teranet, Transparency International Canada, Better Dwelling.

Well, we don’t know who the beneficial owners of the companies bringing money into the banks are. Going out on a limb here, but I’m willing to guess the majority of them are regular companies that have extra cash. However, there’s no way to verify who has been actually buying these units. If a dodgy beneficial owner isn’t on the corporate registry, no government agency flags go off.

Unregulated Private Lenders Provided $10.4 Billion To Companies

Even more Toronto real estate was bought by companies using unregulated private lenders. Over $10.4 billion in mortgages were obtained by companies using private lenders, over the same period. This represents 49% of corporate mortgage dollar volume. To contrast, just 3% of GTA household borrowing originated from private lenders. Private lending is heavily overrepresented in the corporate world.

Greater Toronto Residential Real Estate Mortgage Volume By Lender (Corporate)

The dollar value of mortgages Canadian companies used to buy residential real estate in Greater Toronto

Source: Teranet, Transparency International Canada, Better Dwelling.

Unregulated private lenders are a bigger problem for transparency, since they are… uh, unregulated. TI Canada notes these lenders have no obligations under Canada’s current anti-money laundering regimes. This means they don’t just get to ignore beneficial ownership – they also get to ignore source of funds.

Corporate ownership isn’t the problem, as is the lack of information on buyers. The vast majority of companies may be totally legitimate businesses… or not. However, even a few billion in laundered cash can have a large destabilizing effect on prices. We’ll dive more into the pricing mechanics of money laundering next week though. In the meantime, check out the full report from TI Canada.

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  • Skylar 5 years ago

    Honestly, seeing Vancouver’s situation, Iknew this was coming. Toronto needs its own version of our David Eby, who actuslly gives a shit about stopping dirty money.

  • RM 5 years ago

    That last chart also tells an interesting story about corporate interest buying real estate in 2008, and dumping it towards recently. If I was a betting gal, I would say those are all small companies in the latter trend most likely using their own home at a bank to secure a second regulated loan.

  • MH 5 years ago

    What a rolling clusterf*ck… We gotta “save those first-time home buyers” by throwing more taxpayers’ money into this laundromat. Quick, it’s beginning to sputter, Canadian economy can’t afford it.

    • Peter W 5 years ago

      EXACTLY. We’re using government cash to get first-time buyers to provide liquidity for a market where we have no idea where the money came from. Look at this example from the report.

      “Malkin acquired 111 rental properties in a North York mixed-use complex through an Ontario-registered shell company.”


      “Malkin first applied for Canadian permanent residency in 1994 but was rejected due to alleged links to Russian organized crime – a claim he denies. Undeterred, Malkin applied on multiple occasions for residency and travel visas over the next two decades. The Canadian government remained unconvinced, citing among other things Malkin’s “extended association with persons suspected to be involved in organized crime and money laundering”. Malkin’s lawyers claim he has been unfairly targeted due to geopolitical considerations and have pointed out that he has never been charged with a crime. Nevertheless, with each visa application new concerns emerged regarding Malkin’s business activities and connections.”

      ” It is unclear if he is still the owner of the 111 properties in North York, or if he has more undisclosed real estate in Canada.”

      The government is clueless in both scenarios. They’re either accusing someone with baseless accusations, or allowed someone they believe has sketchy ties buy 111 apartments.

      • M.Bury 5 years ago

        Peter W

        Good points but perhaps instead of “the government is clueless”, you really meant to say it is complicit? Sometimes they make it hard to tell one from the other.

  • Grim Reaper 5 years ago

    For a long time, I have suspected that a substantial component of the Canadian economy is based on money laundering, especially real estate. Condos are particularly useful for money laundering. One way to reduce or eliminate it is to prevent corporate purchase of residential real estate, to only allow personal purchase by citizens and landed immigrants who reside in Canada, no non-resident ownership of residential real estate and no extended vacancy or repeated short-term rental of residential real estate allowed. There are other countries which have those kind of restrictions, Canada should too.

    • SUMSKILLZ 5 years ago

      We don’t want to follow Iceland’s path…

    • kwo 5 years ago

      Did you know that in China there is a term “moving to Canada” that’s a euphemism for laundering money? We didn’t get that type of reputation for nothing.

      • Lahdeedah 5 years ago

        @Kwo – wow. Not that surprised though. Complicit is the correct word.

    • Dan Duran 5 years ago

      You guys are hanging on any sliver of hope that you may get something for mothing.. all this means nothing, actually that money, which hasn’t been proven to be ‘dirty’ at all, is financing construction of condos that are rented out. It’s GOOD for supply. The government is just using your proletarian anger to achieve something else.. a majority in october for starter.. throwing you a bone.

  • george 5 years ago

    “Canada notes these lenders have no obligations under Canada’s current anti-money laundering regimes. This means they don’t just get to ignore beneficial ownership – they also get to ignore source of funds.”

    WOW!!!! Now it all makes sense why we are where we are with the RE….by ignoring it, money laundering is totally allowed in Canada.

  • Sam 5 years ago

    OK, I’m no expert in money laundering (wouldn’t admit it if I was lol), but as far as I know the hardest part is injecting the cash into the financial system (bank). Now, when we say 9.8B in cash, does that mean actual cash (bag of money) or does it mean no loan? If it’s the latter then the money is already laundered… correct? Can someone explain pls 😀

  • Zenity 5 years ago

    It’s simple, no corporations should be allowed to own residential real estate except with special license

  • CleanYourMoney 5 years ago

    Snow washing has been good for business. Gots to turn the black to white some how.

  • Estevam 5 years ago

    If you have illegal money don’t know where to dump ?
    Try to find a real state agente in Canada, he will find the best options for you.

Comments are closed.