Can cash controls and 'CarWatch' stop money laundering in the luxury car market?
Published Tuesday, February 26, 2019 6:53PM PST
Last Updated Tuesday, February 26, 2019 7:21PM PST
Former police investigators are speaking out to CTV News, asking to close a legal loophole that can turn luxury cars and SUVs into literal vehicles for money laundering.
Multiple surveillance targets in police probes that connected drug cash to B.C. casinos owned or drove multiple cars, trucks and SUVs that added up to as much as half a million dollars per person, court records show - a sign that criminals are taking advantage of a lack of controls on cash purchases of luxury vehicles, and are using them as a way to hide dirty cash, said former RCMP investigator Garry Clement.
“They’re buying vehicles, they’re buying boats, they’re buying jewelry. It’s a way of getting rid of the cash and playing with their money and enjoying it,” Clement told CTV News.
Most banks won’t take all big-ticket purchases meant to get rid of the cash, he said. Banks have to report large cash transactions to FinTrac, a federal government agency. But businesses that sell cars have no such restriction.
“There’s no reporting to FinTrac, so it’s a great way to launder money,” Clement said. “The reality is that this is out of control in this country.”
Once the car is purchased, it can be flipped to another buyer – one way to get apparently clean money, he said. And the car is also a crucial element in a cash business: bags or boxes with hundreds of thousands of dollars in them can’t be sent by a bank transfer – they have to be driven around.
Ottawa is wrestling with changing money laundering rules, and requiring car sales businesses and luxury goods to report cash sales as banks would. In B.C., luxury cars are one focus of a second report by former RCMP commissioner Peter German that is also examining the role of dirty cash in real estate and horse racing.
CTV News examined the surveillance logs in E-Pirate, an investigation of a Richmond man that detailed what the Office of Civil Forfeiture alleges was an intricate money laundering operation using B.C.’s casinos.
One target of the surveillance had four vehicles police tracked and determined he owned, documents show: two 2010 Dodge Rams, a 2014 Chevrolet Silverado and a 2014 Land Rover. Altogether, if purchased new, they would be around $200,000.
Another target had five vehicles seized: a 2013 Cadillac Escalade, a 2011 Porsche 911, a 2010 BMW 750i, a 2014 Toyota Sienna, and a 2010 Bentley convertible, documents show. Altogether, if purchased new, they would cost around $520,000.
In Project Territory, police agencies seized six collector cars while cracking down on criminal gangs connected to the Red Scorpions. Among those cars was a Dodge Demon, which an officer estimated was valued at about $200,000.
“We need to report any transactions of cash of $10,000 or more,” Clement said. “If we did that it would put some controls on the industry. We have to start somewhere.”
Former VPD officer Curtis Robinson said he believes that the motivation of the criminal element to have a flashy, showy lifestyle.
“We should be depriving people involved in violent criminal activities of the right to that lifestyle,” he said.
Robinson said the logic of the VPD’s BarWatch program was to take away the spoils of criminal cash, and ensure gangsters couldn’t party in the city’s nicest venues.
The same logic could be applied to cars, he said: an agreement to stop or more closely regulate sales of luxury vehicles to people identified as being a gang member.
“In the car situation, it means so much to be showy and have some place to show off the money. Take it away. The answer is no,” he said.
Two car dealerships contacted by CTV News who the records show had leased vehicles to the people who became police surveillance targets said they don’t accept more than $10,000 in cash.
Vancouver City Councillor Christine Boyle said she was surprised at how easy it could be to purchase luxury vehicles with cash.
“I’m very concerned about it,” she said. “It’s clear we don’t have enough controls.”