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British Columbia is still contemplating a controversial technique now used in Britain to combat organized crime and money laundering through investments in real estate – one that “does not rely on criminal prosecution or evidence of a crime.”

Britain’s National Crime Agency is systematically combing through an official list of investor visa recipients to determine if any of the rich immigrants on the list are suspected of being corrupt foreign officials or members of organized criminal groups.

If so, those individuals are being hit with unexplained wealth orders (UWOs), which force them to show how they bought a particular piece of real estate with legal income. If they cannot do that, the property is seized by the government.

Only two UWOs have been executed to date, but anecdotal reports suggest they are already leading kleptocrats and money launderers to hit pause on parking their money in luxury properties.

Speaking at an anti-corruption conference in Vancouver last week, London-based lawyer Michelle de Kluyver provided an update on how Britain appears to be using this new tool in its fight against global corruption and transnational crime.

Earlier this year, an independent panel on money laundering in real estate recommended that British Columbia add this technique to its tool kit in its continuing fight to crack down on this sophisticated crime.

“Unexplained wealth orders could be used to confiscate property where there is no evident legitimate source of funds, providing another civil process tool that does not rely on criminal prosecution or evidence of a crime,” stated the final report from the group led by law professor Maureen Maloney.

B.C. Attorney-General David Eby asked Ottawa to study how to implement UWOs last year in a letter he sent to Bill Blair after Mr. Blair was named Minister of Organized Crime Reduction. While in Opposition, Mr. Eby’s office compiled records showing that nine students with no apparent sources of income bought $57-million worth of single-family homes in his tony Vancouver-Point Grey riding during a period when Metro Vancouver’s real estate market began skyrocketing.

On Friday, Mr. Eby said he still supports the use of these orders, but his government is focused on using less controversial tools such as uncovering the beneficial ownership of corporations and real estate registered within the province, as well as improving the sharing of intelligence between law-enforcement agencies and regulators of different industries at risk of money laundering.

“Unexplained wealth orders can be really effective, [but] they face some really significant hurdles that would have to be addressed around the Charter to ensure that people’s rights were balanced with the invasive nature of the orders,” said Mr. Eby, who headed the BC Civil Liberties Association (BCCLA) before entering politics.

Meghan McDermott, staff counsel for the BCCLA, said these orders are an attempt by the government and police to do “an end run” around the higher burden of proof they must meet to seize this property in a criminal trial.

“The money-laundering report expressly talks about how there’s a lack of police resources and a lack of expertise to track down the source of the assets,” she said. “Okay, if this is a big problem – of course we don’t like money laundering – then we would say that the proper way to go after it is invest more in police resources and get them trained up.

“We know from the civil-forfeiture scheme that a lot more people have gotten caught up in the enforcement than you would traditionally think, it’s not just hard-core criminals.”

Ms. de Kluyver said UWOs have attracted negative headlines in Australia after an elderly couple had a house forfeited when cannabis was found stashed there, which underscores the need to use this tool very selectively on people with extensive histories of corruption or involvement with organized crime. The two cases to date in Britain meet that bar, she said.

“I don’t think it’s a substitute for a proper investigation,” she said at the TRACE International forum last Thursday. “It fills a particular gap, which is where there is an obvious affordability gap that needs to be explained."

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