[eisbaar]

I'm sorry, but does that article offer ANY evidence at all for the impact of money laundering, except for the "just so" story in the middle? ("money launderers beat up prices, and the rest of the market just runs with it" - as if people were able or willing to pay arbitrary prices).

[JanSolo]

Have you ever lived in Vancouver? It’s a strange place. Everything is expensive and you see ultra rich people everywhere, but there is little in the way of local industry to explain all this wealth. Everyone who lives there will recognise this uneasy feeling of ‘Where did all the money come from?’ For ‘normal’ people it feels like there’s this richer strata of society that exists but there is no clear path into it. Almost like royalty. This article may offer little evidence, but it rings very true for people who live there.

[refurb]

I’ve been to Vancouver a number of times and yes, it has the vibe you describe.

However, money laundering isn’t the only driver of that vibe. I just got the sense it was a lot of money from Hong Kong that flooded Vancouver. So no industry was needed to support the high housing prices, it was being supported from foreign money.

But again, that’s different than laundering money.

[dathinab]

Yes but fairly easy to use houses to launder Mony (if you have enough clean Mony). It's also not to hard to abuse houses for speculative investments and houses if well invested are lastly not prone to turn worthless if there is a big crash. So in the right areas they are a "I lose at most a bit but never all" safety investment you can also use for Mony laundering.

Very attractive for certain kind of wealthy people.

So even if a price rises for normal reasons that people tend to always mingle and drive prices even more.

[valuearb]

It could does not mean it does.

[bsanr2]

My understanding is that much of the reason for parking money in these properties is to get around local (that is, their local, our foreign) tax laws and wealth regulations. If that's the case, it's not different from money laundering. "Tax avoidance" is tantamount to money laundering.

[jdmichal]

Tax avoidance is not money laundering. Not even close. TFA does a good job of describing the process, of which zero pieces fit "purchasing foreign property to avoid local taxes". Reintroduction of these funds back into the local economy after performing whatever tax avoidance tricks might qualify as money laundering.

[mtnGoat]

Tax avoidance and tax circumvention are not the same.

First lesson my tax attorney taught me. ;)

[bsanr2]

I'm sure he'd very much like people to believe so.

[eisbaar]

I have not been to Vancouver, but it sounds very attractive: next to the sea and the mountains, good health care, working democracy and civilization and so on.

It does not sound implausible that housing prices are soaring.

Also perhaps a lot of government regulation that make it difficult to build more housing.

And there are other sources of money besides "money laundering" - why assume of all sources, "money laundering" is the driving force?

Like lets say newly rich Chinese people appreciate the investment in Vancouver. Is that then "money laundering"? Do they just equate "foreign investors" with "money laundering"?

[hnick]

I think the fact they're not allowed to take money out of China makes it laundering by definition. They're hiding illegal money from the Chinese government (once it leaves China it's illegal to hold as I understand it) and legitimising it in Canada. From Canada's perspective, it's probably not laundering depending on how it was originally earned.

> next to the sea and the mountains

Next to the US is probably another big reason but I'm not sure how much that matters with planes.

[eisbaar]

OK if they consider all Chinese investments "money laundering", their theory seems more plausible. Still needs verification, though.

[egsmi]

Sounds like what Bay Area buyers are doing to Hawaii. And that’s not money laundering. Just saying other explanations are certainly possible.

https://www.sfgate.com/hawaii/article/Hawaii-real-estate-mar...

[olalonde]

> Everything is expensive and you see ultra rich people everywhere, but there is little in the way of local industry to explain all this wealth.

Maybe the money comes from abroad, has this occurred to you?

> This article may offer little evidence, but it rings very true for people who live there.

It's a boogeyman used by politicians to have a set of "bad guys" to point to. The truth is most of those wealthy foreigners buying up Vancouver real estate are not money launderers, they're just wealthy foreigners.

[seanmcdirmid]

It would be almost impossible to tell in any case, and even what is money laundering in the west might not be considered as such in China.

[golergka]

> Where did all the money come from?

Elsewhere. It can be surprising only when you look at it through an industrial, 20-century world view. Now, even middle class people are free to move and work wherever they like, so it's only natural that people who made a fortune would seek the most comfortable cities in first world countries and bring their wealth with them. Is there any specific reason to suspect that this wealth is laundered and not simply imported?

[cool_dude85]

They offer an indirect source for the one explicit claim made in the article: 20% of the price increases in London due to laundering. It's not linked, and I wasn't able to find an article online, but the claim is credited to "Christoph Trautvetter of Netzwerk Steuergerechtigkeit"

Aside from that concrete claim, they offer a plausible explanation for why something that may make up a small proportion of sales could cause an outsized increase in prices. And they do draw comparisons to known cases in stock markets. So I think it's still an interesting article.

[eisbaar]

"A plausible explanation" - sorry, no. They offer a "just so" story. Science it ain't.

[Ensorceled]

Yeah, the article just assumes that a) money laundering via real estate is happening, b) it is increasing prices and then c) is trying to explain the logic behind it. But the title is misleading because the never actually establishes a) and b) ... it just meanders around in c)

[itsoktocry]

>Yeah, the article just assumes that a) money laundering via real estate is happening

Sort of like how people are walking into BC casinos with half a million dollars in $20 bills and authorities are being told not to ask questions? Yeah, we don't "know" there's money laundering, but reasonable people ask questions...

https://www.msn.com/en-ca/news/canada/rcmp-detachment-head-w...

https://www.msn.com/en-ca/news/canada/virtually-no-controls-...

[Ensorceled]

Oh, I'm very, very sure money laundering is happening in BC. I'm certain money laundering via real estate is happening all over Canada; Chinese investors are buying abandoned farm land in Northern Ontario for some reason.

[itsoktocry]

I agree, and frankly I understand why Chinese people want to get here. It's a great place!

But we can't have vast sums of capital, of unknown origin, flooding our country and pricing out our own citizens.

[Ensorceled]

Agreed. We definitely need New Zealand style property ownership laws, this is getting out of hand.

[eisbaar]

I'm not sure the former owners of the houses would agree. They made good money from the houses they sold to Chinese people. Is that necessarily a bad thing?

[Ensorceled]

Yes, it is a bad thing. Many of those condos and homes are now empty, raising housing prices on families and making effective city planning impossible.

[pchristensen]

No, but it is a tragedy of the commons situation - the individuals make out like bandits while the social capital is drawn down.

[barbecue_sauce]

Do they really "want to get" there? Don't they just buy the assets and leave them unoccupied?

[Ensorceled]

It's a combination of getting cash out of China etc. and having a safety bolt hole.

[itsoktocry]

>Do they really "want to get" there? Don't they just buy the assets and leave them unoccupied?

I'm sure it's both, and it's really hard to determine in advance.

[maest]

I agree with what you're suggesting - the article presents a theory that, while interesting, is only supported by circumstantial evidence.