Politicians in Canada are mostly pretending they’re desperate to crack down on money laundering, according to the stark, well-constructed argument of a University of Calgary law professor, Sanaa Ahmed.
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Ahmed says the real reason federal and provincial governments have not made a significant dent in the laundering of dirty money is, basically, because they like the cash in the economy.
“The idea appears controversial initially, but it makes eminent sense upon further reflection: Once it is in the system, dirty money behaves just like clean money,” Ahmed says in a bombshell chapter in the new book Dirty Money: Financial Crime in Canada, edited by Christian Leuprecht.
Why did the B.C. government of a decade ago tolerate what came to be known as the “Vancouver model” of money laundering? she asks. After all, many people knew drug cash stuffed in hockey bags was being laundered by being used to gamble at B.C. casinos, with much of it ending up in mostly luxury Canadian real estate, she said.
And why did it take American law enforcement officials, not those in Canada, to last year punish the white-collar criminals inside U.S. branches of the Canada-based TD Bank? They hammered the giant bank, which had a “permissive” reputation, with a $3 billion fine for aiding massive laundering of drug money and other ill-gotten gains.
The answer is the same. Despite the posturing of politicians and the establishment of dozens of anti-money-laundering agencies in Canada, Ahmed says politicians aren’t keen to prosecute laundering because they want the capital, which props up the economy.
“Once we put the moral outrage aside about this, money is just money,” Ahmed said.
The billions of illicit dollars that have poured into Canada “help shore up the domestic economy,” said Ahmed, who has trained as a lawyer and professor in both Pakistan and Canada.
Dirty money, she said, buoys banks, the hospitality sector, realtors, developers, art dealers, restaurants and high-end retail outlets — and, eventually, makes its way into government tax coffers.
The globe’s massive laundering network can only be understood by asking the question: “Who stands to gain?” says Ahmed, a term taken from the Latin phrase about how to identify suspects, cui bono?
Unfortunately, Ahmed argues, it’s not easy to differentiate the benefits of money laundering for private individuals and corporations from those that go to the state, where the revenue is used to pay for such things as health care and transit.
The blight of international money laundering is making headlines again this year because U.S. President Donald Trump is urging Canada to tighten its borders to fentanyl, asylum seekers and unexplained money.
But former president Joe Biden had also chastised Canada for its weak anti-laundering regime, with this country becoming known for its “snow washing.” An estimated $45 billion to $113 billion is laundered here each year, according to Criminal Intelligence Service Canada.
The phenomenon, which exists in most countries to varying degrees, has been covered by many Canadian investigators, including journalist Sam Cooper, in books such as Wilful Blindness, and real-estate analysts Stephen Punwasi and Adam Ross of Transparency International.
Along the way, the public has come to believe British Columbia may be ahead of the enforcement curve, given the Cullen Commission, launched in 2019, examined the extent to which money laundering, foreign and domestic, fuelled a meteoric rise in the housing market.
Austin Cullen, a former B.C. Supreme Court justice, concluded in his 1,800-page report that billions of dollars of criminal and illicit funds flowed annually through B.C. casinos and real estate in the absence of effective federal law enforcement.
Cullen made 101 recommendations, but critics say the B.C. government has failed to follow through on his two leading ideas. One was to create a special B.C. police unit for financial intelligence investigation. The other was to establish an independent office of the legislature to probe money laundering, particularly in real estate.
Most government probes into laundering, Ahmed said, avoid the core economic question: “Can Canada do without illicit financial flows?”
Opponents of money laundering, she says in Dirty Money, “often cite evidence of how laundering is hurting ‘ordinary’ Canadians. Dirty money from abroad, so the argument goes, is pricing Canadians out of the housing market.”
However, what has received much less attention, she says, is “the same money is also a steady source of money for a borrowing-prone government, is funding investment in various industries, is providing jobs and income for ‘ordinary’ Canadian plumbers, masons, carpenters, realtors, mortgage brokers and accountants. And it’s helping gird up Canadian growth figures.”
While it might seem like an unrelated policy, Ahmed maintains that Canada’s immigration strategy, which has brought record numbers to the country since the Liberals were elected in 2015, has been encouraging the influx of illicit funds — and not only from kleptocrats and corrupt officials.
Through economic immigrant programs at the federal and provincial levels, Canada has been enticing foreign nationals to bring their wealth — without “any stipulations regarding the source or origin of funds in the home country,” said Ahmed.
Clearly, she says, the “cleanliness of the money has not been a priority for the Canadian state.”
In her decades of research into money laundering, Ahmed has also noticed that most media outlets have been “obsessed” with the criminal side, which entails drugs, smuggling, arms trafficking, terrorism and bribery. But she calculates that accounts for just one third of illicit financial flows.
It is just as important, she maintains, to focus on the other two-thirds of laundering, which mostly involves stealthy forms of transnational tax evasion and avoidance, including through offshore havens.
Given Ahmed’s message is that political and corporate powers have a vested interest in money laundering and that shoddy law enforcement often reflects their hidden attitudes, she said in a recent TedX lecture she is often asked where the solution lies.
While avoiding naiveté, she told the audience the fight cannot be abandoned.
“The first step of this journey is to necessarily recognize the complicity of the state in the money laundering project. That means rejecting its self-serving narrative. This means saying, ‘We know what you’re doing. And we know why you’re doing it. And we’re not OK with it.’”