MONTREAL ― In the wake of Prince Harry and Meghan Markle’s recent vacation to British Columbia, the British press has been seized with a burning question: Who owns the opulent Vancouver Island mansion that hosted the Duke and Duchess of Sussex?
The question has led to a flurry of unsubstantiated allegations, denials and qualifications, potentially none of it bringing the public any closer to the facts.
It’s a situation that could ― almost ― only happen in Canada. Unlike many other developed countries, Canada doesn’t have any laws that require the owners of residential real estate to identify themselves. It’s a notable weak link in Canada’s anti-corruption laws, and part of the reason the country has become a magnet for money laundering.
Watch: Is Canada’s economy addicted to money laundering? Story continues below.
Whoever owns Mille Fleurs ― as the the 11,000-square-foot property in North Saanich, B.C., is known ― “used highly controversial methods also deployed by money-launderers and tax-evaders to conceal [their] identity,” The Daily Mail reported last week.
The outlet cited neighbours as saying the property had been bought by a wealthy Russian businessman, possibly a billionaire. But in a separate report, it asserted that the owner is Frank Giustra ― a wealthy Canadian mining magnate and founder of B.C. film company Lionsgate. Giustra was born in Sudbury, Ont., and is of Italian, not Russian, origin.
A day later, the paper published Giustra’s vehement denial, stating he doesn’t own the property and doesn’t know the royal couple.
Local news sources took a stab at figuring it out, and reported that the property is owned by nearby Towner Bay Country Club. The Daily Mail, however, says the mystery owner bought shares in the country club so they could hide their ownership of the house.
This game of who-owns-what would be much harder, these days, in most other developed countries, which have shot out ahead of Canada in passing laws to stop money launderers from hiding their ill-gotten gains in real estate.
Canada may need such laws more so than others. In a 2017 report, the global anti-corruption group Transparency International (TI) said the country’s lax laws on real estate mean that a global “corrupt elite” is using Canadian real estate to launder money. It found that the government doesn’t know who owns half of the 100 most expensive residential properties in Vancouver.
“Large amounts of money can be legitimized at once, maintaining or increasing its value. Investments in real estate are seen as an alternative for those who fear having offshore accounts frozen,” the TI report said.
The G20 countries agreed in 2014 to pass laws that would require the “beneficial owner” of a property to reveal themselves ― in other words, no more hiding home ownership behind numbered corporations or lawyers’ firms.
But according to a 2017 report from the U.S. Library of Congress’ research division, Canada and Japan were the only G7 countries not to have followed up on that commitment.
Britain, for instance, established registries of beneficial owners of businesses and land in recent years. Since 2016, title insurers in the U.S. (but not real estate lawyers or agents) are required to identify the real owners of real estate bought in cash. In the European Union, member countries are facing a deadline this month ― January 2020 ― to put into place beneficial ownership rules.
Canada’s lagging position could soon change, starting with British Columbia. The provincial legislature has passed the Land Owner Transparency Act, which will require the actual owner of a property to be identified.
Though the new rule hasn’t been implemented yet, “things have gotten much better” in B.C. in this regard, said James Cohen, executive director of Transparency International Canada.
So far in other provinces, it’s been mostly talk. British Columbia is “a front-runner in the country on beneficial ownership transparency,” Cohen said in an interview with HuffPost.
He’s encouraged by the moves made by the federal government, noting that in their recent mandate letters, both Finance Minister Bill Morneau and Industry Minister Navdeep Bains were instructed to work with the provinces on developing a registry of the beneficial owners of real estate.
“I’d say we’ve got good momentum (on the issue) following last year, with (politicians) right up to the prime minister acknowledging our money laundering problems and the acknowledgment across the country that this isn’t just a localized issue, this is a national issue that we need to deal with.”