Typically, the problem is that they have no way of verifying the person's income if they come from abroad. The only other option is not to give them loans at all even if they put up a high down payment.
On other hand, this is such a double standard. In China, I couldn't even get a credit card because I don't have a Chinese ID number even though I had a job for 9 years + lots of money in their bank.
You see a problem with that, the banks might not given their risk models and a chance to make money on the loan. They have shown that they generally as good credit risks, it’s just that they have no idea where their money is coming from (a legal/moral problem vs. a business one).
Should banks care? If you put up $300k on a $1m property (meaning a $700k loan), and it gets foreclosed, then the bank will recover all of their money. They shouldn't care, as they're in the clear risk wise.
> Should banks care? If you put up $300k on a $1m property (meaning a $700k loan), and it gets foreclosed, then the bank will recover all of their money. They shouldn't care, as they're in the clear risk wise.
From a micro perspective, yes. But a giant book of business relying on this model can easily expose unintended overleveraging in a sector that can hurt valuations regionally, such as China-US relations, more attractive offers elsewhere, etc. It isn't that simple.
Banks are usually subject to anti-money-laundering regulations. If they aren't doing due diligence knowing who their customers are, then they open themselves up to risk from the government.
The problem is Canada has very weak AML rules to begin with, and even weaker capacity to investigate and prosecute violations of those rules successfully.
Canada doesn't really have a specialized national police force - the RCMP's primary function is to be beat cops in rural areas of the country - and it has no equivalent of the SEC (the Supreme Court ruled the federal government doesn't have the authority to set one up). So the highly specialized capabilities needed to investigate trans-national white-collar crime just isn't there. It's hard to take an agency that primarily writes traffic tickets in Yellowknife and task it with tracing sophisticated international money laundering.
This is not correct. AML/KYC regulations are just as strict in Canada as in the USA - they have to be, because our financial systems are so intertwined. Furthermore, it is not the job of the RCMP (or of any of the provincial securities regulators) to oversee these issues; there is a special entity called FINTRAC (http://www.fintrac-canafe.gc.ca/intro-eng.asp) that does this, and believe me they are a deadly serious organization.
(I used to be chief compliance officer and "ultimate designated person" of a registered dealer.)
Most of these loans are one step further, where the collateral on the loan isn't the house, it's enough cash in the bank to pay off the loan in its entirety.
You can get a loan with no credit score if you have the assets.
> On other hand, this is such a double standard. In China, I couldn't even get a credit card because I don't have a Chinese ID number even though I had a job for 9 years + lots of money in their bank.
I don't get it when people point out double standards when living in different countries as if they should be equivalent in both places.
Just because X country offers Y to Z people, why is it normal to expect another country to offer the same thing? Different country, different laws for different people right?
Hmm, maybe? I mean, being a foreigner in America (USA or Canada) is pretty easy compared to being one in China, I'll definitely give you that! China also has a net emigration rate, so they aren't really geared towards having immigrants.
I do like that China at least tries to reciprocate on some things, like 10 year visa durations.
> being a foreigner in America (USA or Canada) is pretty easy compared to being one in China
When I moved to the US from Canada, the banks couldn't access my credit file in Canada -- even though they use the same fucking credit bureaus in both countries! I had to give AT&T $500 cash just to get a cell phone account, and another $500 cash so my wife could have an account too... even though we had already bought our iPhones in cash -- we had no debt with AT&T. They literally needed a $500 deposit in case we ran up some crazy bill with long distance calling (text and data were unlimited).
With a lot of work, we were finally able to get a mortgage even though we were putting about 45% down. The bank issued us kind of trail credit card that they issue all immigrants. I ran into another consultant at a client site and we had lunch together. He was fresh off the boat from India and when he pulled out his credit card we laughed because I held up the same immigrant Visa card. Easier than China, ya... but it's pretty silly here too. How equifax here can't get my stellar credit history from equifax Canada blows my mind.
This is where multi-nationals like Amex come in handy. I'm Canadian and got my first Amex while living in the UK. Later when I moved to the US I was able to bring my Amex history with me and get an Amex there with no issues.
I’m sure there are issues. In China, there is no real credit history, so it is undeveloped in that regards (well, they are trying to replace that with social credit history, but I’m a bad communist).
Under the current messed up ruleset, many people qualify for loans that they likely shouldn't, feeding a housing price bubble that is taking lifes necessities and pricing them out of the reach of most people.
To exacerbate the issue. The bank employees can point out that house prices are going up. If person stops paying, they can claw back property and make profit. This makes sense in a bull market.
That is until there's a recession and all house prices tank with banks selling at same time. But those previous employees? Made redundant in downturn.
When I was working in China, the USA had no idea where my income was coming from either. I just declared my foreign bank accounts and filled in certain lines on my tax return, but that’s it. How could they know?
They probably don’t much care for you or for me, but at least some people will get audited every year, at which point they have the usual remedies: information sharing agreements with foreign governments and financial institutions plus “OK, show us your paperwork.”
I'm not really sure how an audit of an overseas taxpayer would work. Uhm...e.g. does the IRS pay for translation from Chinese or does the taxpayer?
Paper work isn't even standardized, you aren't getting a W2, it will just be random stuff you collect to prove your income. And even then, the IRS still doesn't care where your money actually came from, just that it is all reported.
>The only other option is not to give them loans at all even if they put up a high down payment
This is exactly what happens - it's not easy to get a mortgage without a permanent status (that 0% of foreign students would have). A crazy downpayment would be requested upfront.
True, but your linked article states that the down payment must be between 35 and 50 percent. That provides a huge buffer for the bank should they need to foreclose.
Of course, that says nothing about where the money came from in the first place.
I heard anecdotally that they buy a house for cash and then turn around and get a reverse mortgage/HELOC on it, leaving a lot less than 35-50% in the house.
It doesn't really matter, if you are only borrowing 50-65% of the value, the secondary lender will get screwed, as the first mortgage holder is first in line and gets paid fully before the second mortgage holder gets a dime. Many US banks are similar...if you have 50% to put down, nobody really cares if you make the payments or not. If you make them, great. If not, they'll foreclose, be made whole (plus lots of fees and interest), and have essentially no risk because the equity is so great and they are first in line.
It was amazingly profitable (tax dollar wise) to the previous conservative government ("BC liberals" are a conservative party) so they of course made it as smooth and as easy as possible to launder money in BC through real estate purchases.
Casinos are more complex. I think there is a combination of how fast things go with law enforcement response time (bureaucracy can be very slow, especially on "white collar" crime - especially when the bureaucrats have no comprehension of how big the problem is or could be)
I left Vancouver because this isn't going to end well - too much infrastructure depends on the laundering to continue, but the laundering is making it unreasonably expensive to live there.
Oh, and no I don't blame any particular other country. I strongly suspect a lot of it is income displacement to avoid taxes ... a move only particularly wealthy can do. It's not hard to find some arbitrary person who needs it somewhere, pay them to hide the trail and have them represent - or one of their agents - fronting as a student or the like. Much easier if they're not from the same country who this scam is being done to, or from, I'd think.
(but that's pure conjecture on my part. See CBC radio documentary "Sold!" though for a much better precis).
"Intelligence" is an interesting (fictional) TV show that looks at the links between drugs, financial crime, Canadian-US relations, and the intelligence community in Vancouver. Supposedly was cancelled at the request of the Harper government for hitting too close to home re: water rights.
It was definitely cancelled because the CBC was already under fire from Harper and it was a show that featured a lot of Harper style corruption. The CBC also didn't promote it or put it up for rewards during the time it ran.
This was during the era when all kinds of academics were being followed, threatened and censored and climate research was de-funded and censored. Harper was also publicly threatening CBC funding.
Had a bit of a shock since one of those "Vancouver specials"[1] including the neighboring houses looked just like our old house, but thankfully the timeline doesn't match up at all. I'm unfortunately not surprised that this happens in the city.
"Money laundering paradise" is a bit much. There's problem with reporting about this topic where the narrative is more important than the facts. The text on the page reads: "That money may be fuelling the city's housing crisis and opiate epidemic." I don't believe that tightening up money laundering at the casinos is going to solve the real estate problem or the opioid epidemic but that's what the reporters want you to believe or they believe it themselves.
If you reduce the demand part of the curve, the price goes down. If people feel like they have a chance of a decent life, because housing is more affordable they are less likely to use opioids. There is a reason why the epidemic is in the poor areas of america.
> If you reduce the demand part of the curve, the price goes down. If people feel like they have a chance of a decent life, because housing is more affordable they are less likely to use opioids. There is a reason why the epidemic is in the poor areas of america.
It's not just the poor areas of America that are suffering from opioid abuse. [0]
One paradox of crypto currency is that people attack it for assisting money laundering, when the current financial and regulatory system is so enormously effective at accomplishing that task.
I'm starting to have this odd thought that its time for a softer harm reduction approach regarding undesirable forms of financial activity: dodgy investment schemes, gambling, even money laundering.
Like drugs prohibition doesn't seem to work. It pushes these activities further into the shadows and generates deeper and less obvious forms of corruption. It also seems to drive socially harmful manifestations like the use of residential property as a money dump.
Maybe we could have regulated unregulated financial arenas with appropriate disclaimers and some degree of KYC to prevent the absolute worst use cases?
This isnt addiction. There is no disease here. This is money laundering. This is conspiracy to hide criminal activity. If we harm-reduce we should harm-reduce the underlying crime, not the conspiracy to launder its profits.
This isnt about homeless drug addicts with few choices in life, people that need protection. Money laundering, by definition, is done by people with money, by people with every choise in the world.
That isn't the point of legalization and decriminalization but that if the cure is worse than the disease keeping it illegal is irrational. Not saying that it is the case for money laundering but that is theoretically and counterintuitively possible.
The whole point is that it creates two money types - clean and dirty with extra steps involved and desire to spend their ill gotten gains which results in filtering processes which can drive other problems starting with it driving takeovers and inflating bubbles. It is perfectly possible that despite the harm this is still way preferable than treating all income as clean and tax admissions completely private for sake of right against self incrimination. Again not saying money laundering is right but that it may shockingly prove be better off for everybody if there is say a 25% tax dirty money conversion service. It is like the death penalty in heinous cases - it may be that a serial torture murderer really deserves to die but that the death penalty does more harm than good.
If someone pays that 25% to convert dirty money, then the government is saying that crime is effectively allowed if you can get away with it AND the person who paid it is basically going to be under the lens of law enforcement for the rest of their life.
Gambling us addictive and seems hard wired into our nature. Quite a bit of financial activity is basically gambling.
Another huge category is flight capital from authoritarian countries.
Finally there is a tie in with drugs here. A harm reduction approach with drugs would drastically reduce the amount of black money looking for a way to be laundered.
"A harm reduction approach with drugs would drastically reduce"
NO. Harm reduction in Vacouver at INSITE has basically done nothing. The area around the clinic is a thriving cesspool, worse than it ever was.
The data used to validate 'harm reduction' doesn't even help them: they talk about 'avoided deaths form overdose' as though someone od'ing in an alley would have died fro their od and not had access to ambulances.
It's not really that much more dangerous to shoot up 'in an alley' than in a clinic, surprisingly - you'll eventually have access to an ambulance either way and most OD's are not 'instant death' anyhow.
It's the practice/behaviour that kills, the OD is the instance.
The most obvious benefit is that users can get access to clean up programs etc. but there doesn't seem to be evidence that is materially working.
Vancouver has an entire industry of drug related 'harm reduction' approaches - and yet, the problems continue to thrive. It would seem those policies haven't made a dent, and there might be better ways to spend that money to solve the problem.
> NO. Harm reduction in Vacouver at INSITE has basically done nothing. The area around the clinic is a thriving cesspool, worse than it ever was.
Expecting one program at one location to stop the entire problem is expecting a lot. The real question that needs to be answered is: Is it better to have the program or not? Other than space and a few staff, it can't be expensive to operate, especially when scaled out.
> The most obvious benefit is that users can get access to clean up programs etc. but there doesn't seem to be evidence that is materially working.
Indeed, the OnSite program is available in the same location. What better place to reach users than a program they'll come to everyday.
There's plenty of evidence that opiate dependence treatment works, and is cost-effective: reduced HIV infections (it's not necessarily the opiates themselves that kill you), reduced property crime, reduced deaths from overdose.
> Vancouver has an entire industry of drug related 'harm reduction' approaches - and yet, the problems continue to thrive. It would seem those policies haven't made a dent, and there might be better ways to spend that money to solve the problem.
But would the problem be worse without the current programs?
"We've spent all this money on health care and people are still dying, shutdown the hospitals!"
Anyways, I'd argue any worsening is triggered by the new availability of potent and cheap opioids that people can't dilute properly.
"Expecting one program at one location to stop the entire problem is expecting a lot. "
Nobody is expecting insite to 'solve the problem'.
But - it has to provide some material result - and it does not.
Moreover, there are a flurry of such programs in the neighbourhood, and entire 'self harm industry' of services etc. - and they don't seem to be working.
"There's plenty of evidence that opiate dependence treatment works"
Not arguing with that. The point is, 'insite' doesn't seem to be effectively doing that given the costs - and the negative attribute of supporting/normalizing drug activity.
"But would the problem be worse without the current programs?"
Time for a different approach.
The absolute worst part of the 'soft on drugs' approach is that police aren't willing to do go after people doing bad stuff right in the open.
That part of Vancouver is an open-air drug bazar and it has to stop.
While it may be rational to decriminalize drugs - it's equally rational to implement the actual law in meaningful ways.
It would be rational to have police walking up and down that street all day, making sure nothing illegal is happening - taking a fairly heavy hand.
'Breaking up the critical mass' of bad behaviour, breaking up social networks - this should be the first thing the police should do.
So many people get involved (or get re-involved) because it's easy to score, it's easy to hook up with the community.
Not allowing geographic critical masses or social critical masses to form should be #1 on the agenda.
Of course, drugs will 'always be available' but it's a game of Supply and Demand - and if you can put pressure on the supply so social and economic costs raise - then you can get less people involved in the game.
If anyone is caught in public, high on a hard drug - they should immediately have their name in a DB - and if caught twice, they should basically have mandatory counselling or they should go off to a clinic.
It's absurd that Canadians have to pay the massive price for easy and free hospital care for people who chose (and it is a choice in the end) to do self destructive things.
This way, there's no fear of jail or whatever for hardcore druggies, and frankly 'those who can handle their drugs' and be functional or whatever, probably won't face scrutiny - they can have loved one's and family members intervene. But many will be priced out, and many will get caught up into clinics which is a better investment.
'Harm Reduction' is far too close to 'turn a blind eye and hope that some will come into programs' and it's just not working.
That area of Vancouver could be cleaned up in a heartbeat if the city actually wanted to. The bazar would be dispersed and minimized even if only because of that.
Edit: 'harm reduction' policies are actually the opposite of 'harm reduction' - it's basically 'harm enablement' - it's just the stupid opposite of 'arbitrary tough on drugs i.e. 0 strikes - you go to jail forever'.
Also - it's widely known that organized crime have control of import shipping docs, it's absurd there isn't a hugely heavy hand on that, with tons of real law enforcement inspections. That this could knowingly exist implies a total failure of law enforcement.
> Of course, drugs will 'always be available' but it's a game of Supply and Demand - and if you can put pressure on the supply so social and economic costs raise - then you can get less people involved in the game.
That has failed miserably. By controlling supply of heroin, suppliers moved to more potent agents that are cheaper to produce and easier to import.
This is largely what has driven the thriving of the problem that you have observed.
Don’t underestimate the innovation and ingenuity of suppliers.
Harm reduction is different than legalization and/or decriminalization. The harm-reduction measure for drug addicts in places like vancouvers insight program have absolutely no impact on money. Totally different objectives.
The point is that prohibition doesn't work very well, at least in the democratic West where we don't like to take measures like executing people for being in possession of 200 grams or more of an illicit substance.
The inefficacy and harmful unintended consequences of prohibition have nothing to do with whether the culprits "need protection" or not.
Prohibition works fine well enough, or rather, much better than most alternatives.
If Opium were for sale in every corner store (even if it was safely packaged, measured etc) we would have a healthcare epidemic that would shatter society. About 10% of society would be addicted very quickly, another 20% would have some fallout pretty quick, and that's enough to take everything down.
Opiates are extremely addictive, to the point that doctors now give you the 'minimum number of pills' you need after surgery, not the whole bottle.
The #1 cause opiate problem is addiction to legal pain killers and it's not a 'street problem' it's a 'suburbs problem'.
So if the most conscientious, bill paying, regular folk in society can't even handle access to their regular pain killers, there's no hope for us otherwise.
And now with fentanyl which is wiping people out - the discussion becomes moot because it's just so powerful it's not even a debate.
Most hard drugs should be prohibited and that's just the world we live in. We give up small rights, like the ability to smoke heroin, because society at large can't deal with it, and that statistically probably includes you and I anyhow.
So maybe soften punishment or whatever, decriminalize, fine.
But I don't even think most 'harm reduction' works - in 20 years of 'insite' in Vancouver, that disgusting, drug ridden area is thriving in it's ability to keep people addicts and screwed up.
As for money laundering, it's easier than we think to stop, but the BC government is soft, inept, and everyone is addicted to the money anyhow. Specific requirements and transactional requirements for mortgages, registration of accounts, limits and controls at casinos (you cash out more than $!K you provide an ID etc.)
Corrupt money from Asia is Canada's economic heroin.
>>If Opium were for sale in every corner store (even if it was safely packaged, measured etc) we would have a healthcare epidemic that would shatter society.
Smoking has been decreasing for 60 years, despite being legal, and that's due to anti-smoking campaigns and growing social rejection of smoking. And nicotine doesn't kill a significant proportion of its users within five years the way heroin does.
Drug-use would be heavily discouraged if it were legal. Reducing use through social pressure seems to me to be far more effective than reducing it through legal punishment of those that buy, sell and possess it.
>>The #1 cause opiate problem is addiction to legal pain killers and it's not a 'street problem' it's a 'suburbs problem'.
So the problem could be that medical professionals are recommending people to use it, not that it's available on the street.
Legalizing it would eliminate the entire illicit drug market, and would significantly reduce the crime committed by drug addicts to support their habit.
The fact that prohibited drugs are nevertheless so widespread, that it is trivial to get access to them if you want to, is prima facie evidence that prohibition doesn't work. Opiates (and other drugs) are already for sale on every corner. I don't see any evidence that'd demonstrate that their legality or illegality matters one bit. From the buyer's perspective, it doesn't matter because the likelihood of enforcement affecting you is extremely low (and consequently, risk/benefit ratio is so low, the risk just gets ignored). From the seller's perspective, the extra risk of an illegal activity just gets factored into the price.
"The fact that prohibited drugs are nevertheless so widespread, that it is trivial to get access to them if you want to, is prima facie evidence that prohibition doesn't work"
This is false. It is not trivial to get hard drugs. Most people have no idea how, and if they go that route it's risky.
If drugs were allowed to be in the corners store, you'd see a 100x increase in their use.
Drug prohibition keeps drugs in relatively small terms. Without it, it'd be as common as beer or wine.
The problem with real estate money laundering is technically easy to solve, except that making lots of money via tax avoidance on real estate is a major fuel for corporate profitability.
I can't imagine it can get more blatant than that