Worldwide college students and offshore banking flagged in Canadian actual property cash laundering |

International students and offshore banking flagged in Canadian real estate money laundering  |

2021-11-25 15:30:17

In August 2012, a 19-year-old scholar from Guangdong arrived from the Dominican Republic to Montreal with $23,800 in euros and U.S. {dollars} stuffed into his backpack. 4 months later, Zhang Guanqun bought an 8,500-square-foot mansion in Coquitlam, B.C., for $2.1 million.

It was solely one among Zhang’s many multimillion-dollar transactions whereas attending Coquitlam Faculty. From about 2012 to 2015, Zhang would funnel at the least $33.75 million in digital funds and money by way of Canadian and Hong Kong financial institution accounts.

Because it turned out, nonetheless, the Canada Border Companies Company and Fintrac, Canada’s anti-money laundering watchdog, had lengthy been monitoring Zhang’s actions. They watched his dad and mom, too. Whereas residing in Markham, Ont., they have been needed in China for allegedly defrauding 60,000 buyers of about $200 million in a pyramid scheme, based on filings in a Federal Court docket case involving a refugee declare by the dad and mom.

The filings by CBSA and Fintrac, whose accusations weren’t dominated on by the courtroom, reveal particulars of the complicated investigation. Zhang, now 28, efficiently fought a deportation case primarily based on CBSA accusations that he was concerned in cash laundering schemes and transnational organized crime.

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“The quantity of funds that Zhang has been concerned in receiving and transferring wire transfers is really astonishing,” an October 2015 forensic accounting report filed with the courtroom in CBSA’s case states.

“The forex transactions have been bigger than one would anticipate, from an unemployed scholar.”

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Over 600 pages within the CBSA submitting principally deal with Zhang and associated instances towards his dad and mom, Wang Zhenhua and Yan Chungxiang. The couple arrived in Canada six months after Zhang landed in Vancouver, and immediately, based on Fintrac information additionally filed within the Federal Court docket proceedings, they gave the impression to be utilizing actual property, shell firms and overseas residents in elaborate steps of cash laundering.

“The next exercise raises pink flags for layering (a sort of cash laundering) and potential tax evasion due to a excessive quantity of wire transfers from a overseas jurisdiction and from totally different people have been obtained,” one Fintrac report on Wang and Yan mentioned.

CBSA and Fintrac additionally discovered it suspicious that Yan Chungxiang and Wang Zhenhua — who additionally glided by the Dominican identify of “Antonio” — used quite a few aliases.

CBSA’s recordsdata names dozens of individuals in China, Canadian legislation companies, a distinguished federal Liberal Occasion organizer and even a Dominican Republic official within the nation’s visa renewal division. Additionally they define a wider concern of capital flight from China and secretive offshore banking routes by way of Hong Kong and Caribbean tax havens, which permit corruption suspects to spirit their features overseas, purchase passports of comfort, and conceal soiled cash in Canadian actual property.

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The CBSA recordsdata present a uncommon glimpse into an opaque enterprise mannequin more and more cited in examinations of Canadian actual property, during which kinfolk use overseas college students as fronts to funnel wealth into condos and mansions.

Proof in B.C.’s present inquiry into cash laundering, the Cullen Fee, asserts the occupation of “scholar” is usually used to purchase luxurious real-estate in B.C. In a single instance, fee legal professionals discovered {that a} landowner in China accused of bribery — now going through deportation hearings in Vancouver — had transferred at the least $114 million from a Chinese language province into British Columbia by way of Hong Kong forex exchanges with hyperlinks to organized crime.

The person and his members of the family — whose identities have been redacted in Cullen Fee paperwork — purchased at the least $30-million value of B.C. property, and the corruption suspect’s daughter purchased a $14-million Vancouver mansion, itemizing her occupation on the land title as “scholar.”

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A leaked June 2008 Financial institution of China report, cited by the Cullen Fee, attracts the identical conclusion. A research on “Strategies of Transferring Belongings Outdoors of China by Chinese language Corruptors” means that offenders ask kinfolk, particularly their kids, to review or work within the locations the place they stay. Additionally they use college students to purchase “immovable property” together with properties.

(Critics have famous assertions on corruption from Chinese language state-owned entities and regulators generally have to be considered with warning, as a result of the Chinese language state usually makes use of its justice system for political targets.)

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Transparency Worldwide Canada, the anti-corruption watchdog, has studied luxurious actual property developments in Vancouver, and finds that  “scholar” consumers have been a big concern. Govt director James Cohen, who scanned a few of the Guanqun Zhang case recordsdata obtained by International Information, mentioned “this can be a case research pointing to a mannequin we’ve been red-flagging for some time now.”

Cash path begins close to Beijing

In February 2011, from their workplace in Tianjin, a port metropolis close to Beijing, Zhang’s dad and mom, Wang Zhenhua and Yan Chungxiang, began an funding and consulting firm, Yingxin Fairness Funding, and started elevating funds.

However inside months an investor complained to police, based on a case abstract from China’s Public Safety Bureau (PSB), filed within the Federal Court docket proceedings by CBSA, and in September 2011 police began probing suspicions that Yingxin was a pyramid scheme. One month later, Yan travelled from Shenzhen to Hong Kong. And in December 2011, police arrested Wang Zhenhua on allegations he fraudulently “seduced” hundreds of Chinese language residents to spend money on Yingxin Fairness.

Wang, a tall man, uncharitably described as “fats” in PSB stories, was launched on bail in January 2012, and travelled to Hong Kong. It was Wang’s first step, alleged in an Interpol Purple Discover, in “absconding” to Canada.

In April 2012, their son landed on the  Vancouver airport, presenting a world scholar visa. He had briefly studied at a Catholic highschool in New Jersey, and was then set to review at Coquitlam Faculty. On this suburb simply east of Vancouver, he bought a mountainside mansion — full with six bedrooms and 7 loos — with greater than $2 million.

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And instantly after Zhang landed, within the house of about 14 weeks, the coed obtained at the least $10.2 million from firms managed by his dad and mom in Singapore and Hong Kong. His dad and mom would quickly observe him to Canada.

Federal courtroom information point out that the couple arrived in September 2012, coming into with visas issued by the Canadian embassy within the Dominican Republic. In the identical month, again in Wang’s dwelling province of Jilin, one among his co-accused was sentenced to 4 years in jail “for taking part in Yingxin Firm’s pyramid promoting actions,” PSB paperwork point out.

Wang and Yan resided in Markham, Ont., the place they arrange an organization known as MixCulture Capital with an area couple from China.

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MixCulture’s mission was unclear. On one hand, it purported to advertise tourism by way of the celebration of Chinese language, Canadian and Dominican traditions. It was additionally described as an funding fund for a $5.3-million parcel of properties bought by Wang and Yan in Tweed, Ont., a bucolic setting south of Algonquin Park. In one other iteration, it was purported to be a forex change and cash switch enterprise, based on Ontario civil courtroom information in a case the place Wang and Yan claimed to have been defrauded.

However when relations between MixCulture’s administrators went bitter in late 2013, based on CBSA filings, one of many administrators, Chen Xi, reported to York Regional Police that Wang and Yan had transferred from $40 to $50 million to their son, and Chen alleged the funds concerned “fraud and cash laundering.”

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Fintrac filings present that additionally in late 2013, Zhang Guanqun began wiring huge funds out of his accounts, finishing $17.5 million in transfers in 4 months, to accounts in Hong Kong, Saint Kitts and Nevis, Markham and Vancouver.

In the meantime, CBSA flagged transactions between MixCulture and Glenis Guzman, a Dominican Republic official answerable for visa renewals on the nation’s embassy in Ottawa. A Fintrac suspicious transaction report says that in November 2013, Guzman was wired $20,000 from MixCulture.

The official instantly tried to withdraw US$20,000 money, the report says, telling her Financial institution of Montreal department she wanted to ship the funds to the Dominican Republic. As a substitute, the department supplied Guzman a US$20,000 financial institution draft, payable to an Ottawa forex change.

An investigation linked the funds from MixCulture to fraud, and since Guzman moved the funds by way of her account with complicated steps that gave the impression to be a cash laundering method often called “layering” — a Fintrac report filed in courtroom named her as a suspect in washing MixCulture’s proceeds.

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Ontario courtroom information present that Wang and Yan obtained short-term resident visas for Canada within the Dominican Republic in September 2013, and that they arrived in Canada on November 30, 2013, two days after MixCulture transferred US$20,000 to Guzman’s accounts.

In response to questions from International Information on the case, the Dominican Republic said: “Mrs. Guzmán Felipe concluded her posting on the Embassy of the Dominican Republic in Canada in July 2018, due to this fact we are going to ahead your message to the Division of Authorized Affairs of our Ministry of Overseas Affairs to open an investigation on this matter.”

Based on the Fintrac filings, Wang and Yan arrange a number of Canadian financial institution accounts, informing bankers they have been actual property tycoons with many years of expertise in China. They usually bought at the least seven properties in Ontario alone.

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The Fintrac information additionally say MixCulture, its administrators, and Guanqun Zhang have been concerned in $86-million value of  Canadian transactions. Wang — the daddy — obtained 29 wire transfers from 29 totally different Chinese language individuals to an HSBC account, in a number of days.

All of the transactions have been associated to college students, and purportedly to fund tuition, journey and residing bills. In one other Fintrac report, investigators famous it was extremely uncommon that Wang obtained 200 wire transfers to his CIBC account from dozens of various individuals in China.

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These transactions raised “pink flags for layering [a money laundering technique] and potential tax evasion,” Fintrac information say.

As CBSA watched with mounting suspicion, they employed a forensic accountant to audit Zhang’s banking.

In October 2015, the report, filed within the Federal Court docket proceedings, concluded Zhang’s buy of a $2.1-million dwelling in Coquitlam, which he offered for $1.9 million in below two years, was “extremely suspicious, and might be thought-about an try to combine funds which he had obtained from his dad and mom.”

It was one among at the least 5 properties Zhang bought in B.C., together with a mansion in Richmond that Zhang purchased for $3.15 million, land titles filed in Federal Court docket present.

The accountant additionally discovered that Zhang’s transfers of $4.9 million to a British Virgin Islands-registered firm gave the impression to be “smurfing” — a money-laundering method “usually used to interrupt up the amount of money deposit into smaller quantities to keep away from authorities reporting necessities or scale back suspicion on the native financial institution,” the report mentioned.

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Fintrac additionally flagged one other switch: $4.5 million to an organization in Barbados, ranked among the many world’s top-15 nations for suspected money-laundering transfers.

CBSA’s forensic evaluation spotlighted a number of different individuals concerned in Zhang’s transfers. One was a Saint Kitts lawyer named Fitzroy Eddy, who obtained a US$10,387 wire switch from Zhang’s CIBC account. On-line information within the “Paradise Papers” — a database of leaked information associated to offshore banking — present a person named Fitzroy Eddy offering offshore belief account and immigration-investment companies. The deal with from the papers exhibits up on Zhang’s wire switch.

Eddy didn’t reply to emails and cellphone calls requesting remark from International Information.

International students and offshore banking flagged in Canadian real estate money laundering - image

The accountant additionally zeroed in on a relationship between Zhang Guanqun, a “businessman” from Shenzhen named Jiuju Wang who banked in Hong Kong, and Xin (Richard) Zhou of Thornhill, Ont.

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On the time, Xin Zhou was on the payroll of Ontario’s provincial Legislative Meeting as a “group outreach” official below the federal government of former Ontario Liberal premier Kathleen Wynne, a Fintrac report says. A Fintrac disclosure provides that Zhou’s reported annual wage in Canada was $26,000.

In 2014, Zhou was additionally fundraising co-chair for the federal Liberal Occasion, his LinkedIn profile says. Zhou briefly rose to prominence as a pivotal group organizer for Justin Trudeau’s 2016 marketing campaign. In a couple of months, from 2013 to early 2014, Guanqun Zhang despatched $2,999,985 to Richard Zhou. He additionally wired $6.3 million to Jiuju Wang in Hong Kong. And Jiuju Wang despatched Zhou $800,000 from Hong Kong.

A Fintrac suspicious transaction report discovered Richard Zhou’s “account exercise is inconsistent with buyer’s said occupation … (and Zhou’s financial institution) was unable to determine supply of funds, (of) incoming and outgoing wires to unknown third events and enterprise entities.”

Fintrac additionally flagged $522,985 coming from Zhou’s accounts to quite a few immigration and litigation legislation companies.

Based on Fintrac, these incoming and outgoing transactions raised suspicions, however when Zhou’s financial institution requested him to clarify “he refused to supply particulars or his relationship to the remitters.”

A Fintrac suspicious transaction report particulars monetary transactions flowing from Xin Zhou’s accounts to varied legislation companies.

When Zhou’s financial institution pressed him on “the supply of the incoming wires,” he defined that “the character of his enterprise is to supply help to abroad college students with arranging housing wants and college purposes.” The courtroom didn’t rule on the allegations concerning Zhou. Zhou has not but responded to a number of requests for remark from International Information on e-mail and cellphone.

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Since CBSA detained them in 2014, Wang Zhenhua and Yan Chungxiang have fought deportation, together with submitting a civil case that accused unidentified CBSA officers of wrongdoing. Court docket filings present from 2015 to 2018, brokers searched and questioned Zhang every time he re-entered Canada.

In March 2016, Zhang returned from a procuring journey in Washington state, and a CBSA officer reported that his cellphone texts confirmed that he had purchased a apartment for $366,000 in Richmond, simply exterior Vancouver, utilizing an area lawyer. When Zhang returned to Vancouver from Hawaii two months later, a search of his cellphone confirmed he had just lately bought 2,000 shares of the Canadian pharmaceutical firm Valeant, in a $168,000 transaction.

Lorne Waldman, who represented Wang and Yan of their refugee declare, mentioned he not represents the couple and he couldn’t touch upon their case or level to a different consultant for them. International Information couldn’t get a response from three different legal professionals which have represented the couple.

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From 2016 to 2018 Fintrac continued to observe Zhang carefully, stories present, flagging $7.29 million value of transactions, in 27 digital fund switch stories and one suspicious transaction report. In 2018, CBSA ready an inadmissibility report towards Zhang which was referred to the Immigration and Refugee Board for deportation.

In response to questions from International Information, Guanqun Zhang’s immigration lawyer Lawrence Wong famous that in July 2021, a federal courtroom decide put aside Public Security Canada’s determination to ship Zhang to an admissibility listening to on money-laundering suspicions. The choice granted Zhang a judicial evaluate of CBSA’s case and didn’t rule on Fintrac’s allegations.

Wong, who was requested to touch upon Fintrac information concerning Zhang and connecting his consumer to Richard Zhou and others named within the transaction stories, disputed Fintrac’s proof as disputed and inaccurate.

“Fintrac paperwork look like your principal supply and they’re pure unsourced rumour,” a lawyer responding for Wong said. “They got no weight by the Federal Court docket and after the Federal Court docket put aside the Minister’s Delegate referral; the Minister’s Delegate determined to not do one other referral by closing its file. The courtroom’s determination has introduced the method to an finish.”

In a response, Fintrac wouldn’t reply particular questions on its reporting within the Zhang case, however said, “Fintrac’s monetary intelligence is correct and valued by Canada’s legislation enforcement and nationwide safety companies.”

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CBSA mentioned it will not remark about ongoing instances.

However based on Clarence Lo, the CBSA officer who concluded the allegations Zhang was engaged in cash laundering have been sufficiently well-founded to seek advice from the Immigration and Refugee Board, the case boils down as to whether the worldwide scholar was “merely” following his dad and mom’ instructions, or knew what he was doing, whereas “actively concerned within the receiving or transferring since his arrival in Canada (of) tens of hundreds of thousands of {dollars}.”

“The numbers on the Fintrac stories are laborious to disregard,” Lo wrote in his December 2017 deportation suggestion. “It takes a reasonably sensible particular person with monetary savvy to finish that many wire transfers of considerable quantities over a protracted time period.”

© 2021 International Information, a division of Corus Leisure Inc.

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