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

In August 2012, a 19-year-old pupil 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 considered one of Zhang’s many multimillion-dollar transactions whereas attending Coquitlam Faculty. From about 2012 to 2015, Zhang would funnel no less than $33.75 million in digital funds and money by 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 mother and father, too. Whereas dwelling in Markham, Ont., they had been wished in China for allegedly defrauding 60,000 traders of about $200 million in a pyramid scheme, in accordance with filings in a Federal Courtroom case involving a refugee declare by the mother and father.

The filings by CBSA and Fintrac, whose accusations weren’t dominated on by the court docket, reveal particulars of the advanced 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 amount of funds that Zhang has been involved in receiving and transferring wire transfers is truly astonishing,” an October 2015 forensic accounting report filed with the court docket in CBSA’s case states.

“The currency transactions were larger than one would expect, from an unemployed student.”

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Over 600 pages within the CBSA submitting principally give attention to Zhang and associated circumstances towards his mother and father, Wang Zhenhua and Yan Chungxiang. The couple arrived in Canada six months after Zhang landed in Vancouver, and straight away, in accordance with Fintrac information additionally filed within the Federal Courtroom proceedings, they gave the impression to be utilizing actual property, shell corporations and international residents in elaborate steps of cash laundering.

“The following activity raises red flags for layering (a type of money laundering) and potential tax evasion because of a high volume of wire transfers from a foreign jurisdiction and from different individuals were received,” one Fintrac report on Wang and Yan stated.

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

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

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The CBSA information present a uncommon glimpse into an opaque enterprise mannequin more and more cited in examinations of Canadian actual property, wherein kin use international 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 “student” is commonly used to purchase luxurious real-estate in B.C. In a single instance, fee attorneys discovered {that a} landowner in China accused of bribery — now going through deportation hearings in Vancouver — had transferred no less than $114 million from a Chinese language province into British Columbia by Hong Kong forex exchanges with hyperlinks to organized crime.

The person and his relations — whose identities had been redacted in Cullen Fee paperwork — purchased no less than $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 “student.”

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A leaked June 2008 Financial institution of China report, cited by the Cullen Fee, attracts the identical conclusion. A examine on “Methods of Transferring Assets Outside of China by Chinese Corruptors” means that offenders ask kin, particularly their youngsters, to check or work within the locations the place they dwell. In addition they use college students to purchase “immovable assets” together with houses.

(Critics have famous assertions on corruption from Chinese language state-owned entities and regulators generally should be seen 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 tendencies in Vancouver, and finds that  “student” patrons had been a big concern. Govt director James Cohen, who scanned a number of the Guanqun Zhang case information obtained by World Information, stated “this is a case study pointing to a model we have been red-flagging for a while now.”

Cash path begins close to Beijing

In February 2011, from their workplace in Tianjin, a port metropolis close to Beijing, Zhang’s mother and father, 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, in accordance with a case abstract from China’s Public Safety Bureau (PSB), filed within the Federal Courtroom 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 “fat” in PSB experiences, 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 global pupil visa. He had briefly studied at a Catholic highschool in New Jersey, and was then set to check 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 scholar obtained no less than $10.2 million from corporations managed by his mother and father in Singapore and Hong Kong. His mother and father would quickly observe him to Canada.

Federal court docket 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 residence province of Jilin, considered one of his co-accused was sentenced to 4 years in jail “for participating in Yingxin Company’s pyramid selling activities,” PSB paperwork point out.

Wang and Yan resided in Markham, Ont., the place they arrange an organization referred to as MixCulture Capital with a neighborhood couple from China.

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MixCulture’s mission was unclear. On one hand, it purported to advertise tourism by 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 imagined to be a forex alternate and cash switch enterprise, in accordance with Ontario civil court docket 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, in accordance with 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 money laundering.”

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Fintrac filings present that additionally in late 2013, Zhang Guanqun began wiring large 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 accountable 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 offered Guzman a US$20,000 financial institution draft, payable to an Ottawa forex alternate.

An investigation linked the funds from MixCulture to fraud, and since Guzman moved the funds by her account with advanced steps that gave the impression to be a cash laundering method generally known as “layering” — a Fintrac report filed in court docket named her as a suspect in washing MixCulture’s proceeds.

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Ontario court docket information present that Wang and Yan obtained momentary 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 World Information on the case, the Dominican Republic said: “Mrs. Guzmán Felipe concluded her posting at the Embassy of the Dominican Republic in Canada in July 2018, therefore we will forward your message to the Department of Legal Affairs of our Ministry of Foreign Affairs to open an investigation on this matter.”

In accordance with the Fintrac filings, Wang and Yan arrange a number of Canadian financial institution accounts, informing bankers they had been actual property tycoons with many years of expertise in China. And so they bought no less than seven properties in Ontario alone.

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The Fintrac information additionally say MixCulture, its administrators, and Guanqun Zhang had 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 had been associated to college students, and purportedly to fund tuition, journey and dwelling 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 “red 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 Courtroom proceedings, concluded Zhang’s buy of a $2.1-million residence in Coquitlam, which he offered for $1.9 million in underneath two years, was “highly suspicious, and could be considered an attempt to integrate funds which he had received from his parents.”

It was considered one of no less than 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 Courtroom 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 “often used to break up the amount of cash deposit into smaller amounts to avoid government reporting requirements or reduce suspicion at the local bank,” the report stated.

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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 providers. The tackle from the papers exhibits up on Zhang’s wire switch.

Eddy didn’t reply to emails and cellphone calls requesting remark from World 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 “community outreach” official underneath 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 Celebration, 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 activity is inconsistent with customer’s stated occupation … (and Zhou’s bank) was unable to ascertain source of funds, (of) incoming and outgoing wires to unknown third parties and business entities.”

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

In accordance with Fintrac, these incoming and outgoing transactions raised suspicions, however when Zhou’s financial institution requested him to clarify “he refused to provide details 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 source of the incoming wires,” he defined that “the nature of his business is to provide assistance to overseas students with arranging housing needs and school applications.” The court docket didn’t rule on the allegations relating to Zhou. Zhou has not but responded to a number of requests for remark from World 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. Courtroom filings present from 2015 to 2018, brokers searched and questioned Zhang at any time when he re-entered Canada.

In March 2016, Zhang returned from a buying journey in Washington state, and a CBSA officer reported that his cellphone texts confirmed that he had purchased a rental for $366,000 in Richmond, simply outdoors Vancouver, utilizing a neighborhood lawyer. When Zhang returned to Vancouver from Hawaii two months later, a search of his cellphone confirmed he had 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, stated he not represents the couple and he couldn’t touch upon their case or level to a different consultant for them. World Information couldn’t get a response from three different attorneys which have represented the couple.

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From 2016 to 2018 Fintrac continued to look at Zhang carefully, experiences present, flagging $7.29 million value of transactions, in 27 digital fund switch experiences 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 World Information, Guanqun Zhang’s immigration lawyer Lawrence Wong famous that in July 2021, a federal court docket choose 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 assessment of CBSA’s case and didn’t rule on Fintrac’s allegations.

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

“Fintrac documents appear to be your principal source and they are pure unsourced hearsay,” a lawyer responding for Wong said. “They were given no weight by the Federal Court and after the Federal Court set aside the Minister’s Delegate referral; the Minister’s Delegate decided not to do another referral by closing its file. The court’s decision has brought the process to an end.”

In a response, Fintrac wouldn’t reply particular questions on its reporting within the Zhang case, however said, “Fintrac’s financial intelligence is accurate and valued by Canada’s law enforcement and national security agencies.”

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CBSA stated it could not remark about ongoing circumstances.

However in accordance with Clarence Lo, the CBSA officer who concluded the allegations Zhang was engaged in cash laundering had been sufficiently well-founded to consult with the Immigration and Refugee Board, the case boils down as to whether the worldwide pupil was “merely” following his mother and father’ instructions, or knew what he was doing, whereas “actively involved in the receiving or transferring since his arrival in Canada (of) tens of millions of dollars.”

“The numbers on the Fintrac reports are hard to ignore,” Lo wrote in his December 2017 deportation suggestion. “It takes a fairly smart individual with financial savvy to complete that many wire transfers of substantial amounts over a long period of time.”

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

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