Bankers at HSBC Canada allegedly verified fake Chinese income mortgages for a Toronto realtor with ties to Beijing. The realtor claimed a fake Chinese income of $763,689 in order to secure HSBC mortgages for two properties. The case reveals a network that allegedly laundered money from China into Toronto real estate and used forged Chinese employment records to obtain massive mortgages from Canadian banks. An HSBC major financial crimes probe found that the bank's offshore verification team and Aurora branch staff approved the fake income mortgages for the realtor in 2020. The case raises concerns about money laundering and systemic mortgage fraud in Canada's banking sector, particularly involving Chinese diaspora clients [9606ec50].
The whistleblower who uncovered the fraud alleges that Chinese transnational fraud networks are operating in Canada's banking sector. The case also highlights the issue of money laundering flooding into Canada's banks and real estate from corruption-prone states like China and Iran. The investigation by Fintrac discovered that wire transfers from Hong Kong were used to fund home mortgages for offshore and diaspora buyers. The leaked banking documents suggest that the 'Toronto Method' of real estate money laundering started as early as 2013. The case also raises concerns about collusion between banking staff and clients in real estate mortgage fraud and money laundering. The investigation found that even if Canadian banks 'exit' clients involved in Chinese transnational money laundering, bad actors simply transfer their funds through accounts of other community members to secure new mortgages at different banks. The investigation also revealed that the realtor owned at least five houses, some of which were rented out. The examination of the realtor's transactions showed that her account was funded almost exclusively by mobile cheque deposits, including rent cheques from three separate renters. The investigation also found connections between the realtor and another client who had opened an HSBC Canada account in 2019 and wired funds into the realtor's account in 2014. The case is seen as an example of classic money laundering, where nominees are used to obtain mortgages and the proceeds from selling the properties are used to convert black money from China into legal Canadian dollars. The article also highlights the lack of power of Canada's banking regulator, OFSI, to address toxic loans and money laundering in the banking sector [9606ec50].