For eight years, Chinese property developer Chen Runkai used hundreds of wire transfers to move tens of millions of dollars into accounts at Canadian banks –– a technique experts say is a hallmark of money laundering.
Yet Canada’s biggest banks –– including the Royal Bank of Canada, CIBC, TD and the Bank of Montreal –– all accepted the money without flagging it to the country’s financial regulator.
Only one financial institution acted: The Vancouver arm of Switzerland’s UBS bank filed a suspicious activity report in 2012 after noting massive flows of unexplained money into a Chen family account.
“All kinds of alarm bells should have gone off,” said Garry Clement, a former Royal Canadian Mounted Police superintendent focused on proceeds of crime.
“It almost gives the impression they’re asleep at the switch… It just shows that the system is broken,” added Clement, who is now chief of anti-money laundering for VersaBank.
At a time when governments are wrestling with the impacts of illicit foreign funds entering overheated real estate markets in Vancouver and Toronto, the unquestioned flow of Chen’s money has raised concerns about the due diligence and rigor employed by Canadian banks when it comes to anti-money laundering detection and reporting.
The Toronto Star and OCCRP reached out to banks that received Chen’s funds and asked why the money flows did not trigger concerns or formal reports to authorities. The banks each said they could not comment on individual customers. They added that they take their anti-money laundering obligations seriously, have implemented controls, and comply with all regulations.
The story of Chen –– how he moved to Canada from China in 2006 with modest means, then accumulated tens of millions of dollars and luxury homes in Vancouver, while facing charges in his home country for alleged bribery –– was detailed in a recent investigation.
The mysterious source of Chen’s conspicuous wealth, and its movement to Vancouver where he now lives with his family, has been the subject of an investigation by Canada’s financial intelligence unit, as well as a probe by a British Columbia commission studying the impact of money laundering in that province.
In 2012, the year Chen’s financial transactions were first flagged by UBS, his daughter bought a mansion with a tennis court and swimming pool near the beach in Vancouver for 14.7 million Canadian dollars. She paid for it without a mortgage, while listing her occupation as “student.” Chen bought a CA$15.6 million mansion on the same street in 2016.
“He was successful in obtaining and making a lot of money in real estate development in China without being involved in corruption,” said Lorne Waldman, a Toronto immigration lawyer representing Chen. “He didn’t do anything wrong.”