Thanks to new legislation coming out of the Canadian province of British Columbia, set to become law next year, we might soon learn the identities of people using shell companies to buy units in one of President Donald Trump’s most lucrative — and controversial — foreign real estate projects. The legislation would create a registry of real names behind anonymous shell companies and trusts — both of which are commonly used in money-laundering, and both of which have turned Vancouver into a global haven for dirty money.
Since its inception in 2017, the $360 million, 616-foot-tall Trump International Hotel and Tower in Vancouver has been dogged by controversy, especially as it pertains to worries about foreigners investing in the building in order to try to influence presidential decision-making. In 2018 U.S. counterintelligence officials began investigating the building, according to CNN, looking into the financing of the building’s construction and sales.
These concerns mirror similar questions surrounding Trump’s buildings in places like Panama and Azerbaijan. Those projects featured red-flag signs that indicate money laundering — specifically buyers using anonymous shell companies to hide their identities. The Trump Organization has since cut ties to the Panama and Azerbaijan holdings, but not so in Canada, where a licensing deal at the Vancouver property has netted the Trump Organization at least $5 million in the past two years alone.
The legislation, known as the Land Owner Transparency Act, is designed to curb the use of shell companies by making public a database of beneficial owners behind anonymous companies purchasing real estate across the province. The registry, which will be available to the public, is planned to come online in 2020.
There are still unanswered questions about the legislation, especially when it comes to who will be tasked with actually ensuring that the information in the database is accurate. But the planned registry has already received accolades from pro-transparency advocates across the country. Nancy Merrill, president of the Law Society of British Columbia, described the legislation as “groundbreaking.” And James Cohen, executive director of Transparency International Canada, told ThinkProgress that the legislation jumped British Columbia to the front of the global effort to combat dirty money pouring into Western real estate. “This legislation is probably the most progressive not just in Canada but in the world, quite frankly,” he said.
The legislation also can’t come a moment too soon. While efforts to highlight kleptocratic practices — which include stashing ill-gotten gains in real estate in Western countries — have focused largely on places like London, New York, and Miami, Vancouver has spent the past few years transforming into one of the primary hubs for foreign criminals and crooked officials to launder their loot.
That’s in part because Canada, like much of the U.S., doesn’t require any transparency when it comes to who is actually controlling the shell companies snapping up mansions and condos across the country — including many in Trump’s Vancouver property.
In Vancouver alone, local authorities estimated that some $1 billion worth of property transactions in 2016 were linked to Chinese organized crime syndicates. Experts tracking Chinese organized crime refer to these tactics as “the Vancouver model.” A Transparency International Canada analysis found that “nearly half of the 100 most valuable residential properties in Greater Vancouver are held through structures that hide their beneficial owners.” (One of the most memorable purchases happened when a Chinese student, who had no sign of income, managed to pick up a $31.1 million Vancouver mansion.)
And Vancouver’s problems appear to be worsening. Earlier this year, British Columbia Attorney General David Eby estimated that approximately $2 billion in dirty money had cycled through casinos and real estate in the province in the last year alone. The issue is not limited to Vancouver, either: As Transparency International Canada found, much of the tens of billions of dollars that have poured into residential housing in the greater Toronto area since 2008 is held by anonymous companies.
Trump, as with others involved over the past decade in the construction of luxury apartment buildings, has profited handsomely from allowing buyers to remain anonymous. And his company has profited even more from anonymous purchases since Trump ran for president: Some 70% of the Trump Organization’s sales have gone to anonymous shell companies since Trump won the Republican nomination in 2016.
The ability to anonymously purchase Trump-branded units has raised serious ethical concerns about both national security weaknesses and the potential for undue influence over a sitting president. But while much attention surrounding Trump’s foreign interests has focused on other projects — including allegations of drug-running at the Panama property, or deals with post-Soviet kleptocrats in Azerbaijan — the pending legislation in Vancouver will likely offer extraordinary insight into who is investing in the president’s brand while choosing to remain anonymous.
The legislation could also help provide a potential model if and when the U.S., which still allows anonymous shell companies to purchase property across most of the country, decides to follow suit.
“I think we’re starting to move in the right direction,” Cohen told ThinkProgress. “We’re starting to see momentum. The pressure has come on — internationally and domestically, on the federal and provincial governments — but we can’t be idle on this.”