Six Canadian Banks Helped a Man Wanted in China Launder Money
They accepted over $100M, no questions asked.
Unraveling the thread of this story allows us to better understand why Canada is seen as a paradise for fraudsters. And this state of affairs stems mainly from the lack of vigilance of its institutions, public as well as private. The first culprits were the Canadian customs employees who blindly granted Chen Runkai’s immigration request. It was in 2006, the year Runkai and his family set foot in Canada from China through the defunct Immigrant Investor Program.
The man had first claimed that he was earning around $41,000 in China only to later tell the authorities that he and his wife had managed to raise $1.26 million for investment purposes in his new country. A contradiction that, it seems, did not raise some eyebrows among the federal employees responsible for examining his record.
Within a year of its arrival on Canadian soil, the Runkai family bought a $2.3 million house in Vancouver. Ten years later, it offered itself a $15.6 million mansion, still in Vancouver. Four years earlier, in 2012, the Runkais’s 25-year-old daughter had shelled out $14 million for the purchase of a property that included a tennis court.
But where did these funds come from? According to a Canadian investigation, they were the proceeds of an obscure land deal in exchange for bribes in China, which is why the Chinese government issued an arrest warrant against Chen Runkai.
Complicit Banks?
The funds began to pile up in the family’s bank accounts as soon as 2010. First, $15.1 million was transferred by four companies from Hong Kong and mainland China. Millions more followed, all transferred “through offshore companies in tax havens and an underground banking network of companies and Hong Kong currency exchanges, some with connections to organized crime”, according to the Organized Crime and Corruption Reporting Project (OCCRP). By the end of 2014, the Chen family had moved over $114 million into Canada. Transfers involving small bills also took place in Chen Runkai’s mother’s account.
Among the financial institutions through which these transactions passed, only one raised the red flag: the Vancouver arm of the Union of Swiss Banks (UBS). The other institutions, namely the Bank of Montreal (BMO), HSBC, the Toronto Dominion (TD), CIBC, the Royal Bank, and Scotiabank, were either complicit or completely oblivious to the existence of this scheme.
BMO received C$83.7 million between 2009 and 2016 from the Runkai family. In 2013 alone, 52.2 million was deposited into a family account through 101 transactions. The following year, another 28.4 million were transferred to other accounts at BMO via 59 transfers. HSBC meanwhile received $41.5 million through 85 transfers in 2013 and 2014, all through a Hong Kong money exchange company, according to the OCCRP.
The Toronto Dominion received $16.4 million for the Chen family accounts through 43 transfers between 2011 and 2014, while CIBC reported $14.7 million through 13 transfers between 2009 and 2011. Finally, the Royal Bank authorized 24 transfers worth $11 million in 2013, and Scotiabank accepted $1.35 million in 2013 and 2014.
These institutions, despite the fraudulent nature of these transactions, never notified Canadian regulators, unlike UBS. As for Chen Runkai, he was charged with, among other things, “misrepresentation” and “organized criminality”. The Canadian Border Services Agency found him “inadmissible” for citizenship, but he is appealing that decision, according to the OCCRP.
Canada, an Organized Crime Haven
A 2020 report by Criminal Intelligence Service Canada (CISC) found that up to $113 billion on average is laundered in the country each year. A total of 176 organized groups are fully integrated into the Canadian economy, according to the report, and nearly half are involved in the cocaine trade.
A British Columbia government expert panel estimated in 2019 that over $7 billion in dirty money was laundered in the province in 2018 alone mainly through real estate, leading to an increase in house prices of around 5%.
Another report by Criminal Intelligence Service Canada released this time in 2021 revealed that 31 organized crime groups had infiltrated Canadian public sector agencies and departments. Six of these criminal groups are reportedly exercising considerable influence over federal institutions.
Sources
OCCRP #1, #2, The Epoch Times
