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Attorney-General David Eby speaks to during a press conference at Legislature in Victoria on Sept. 18, 2017.CHAD HIPOLITO/The Canadian Press

B.C.'s top lawmaker says the province will bring in new, concrete measures to "close the loopholes" that allow lenders connected to the fentanyl trade to launder money by granting large cash loans and mortgages to Vancouver-area property owners.

Attorney-General David Eby said possible changes include requiring private lenders to provide proof of how the money they are loaning was obtained and provide more information about who they are, before they can register a mortgage or claim against real estate.

"For too long it's been too easy to do business in B.C. under a cloak of secrecy," Mr. Eby said. "I can reassure British Columbians we are fully engaged in this issue. We are formulating the policy work to ensure that our responses are as bullet proof as possible."

Read more: B.C. vows crackdown after Globe investigation reveals money-laundering scheme

The pledge comes as a result of a Globe and Mail investigation, which revealed how 17 local residents, most associated with drug trafficking, are effectively parking millions of dollars in Vancouver-area real estate. Those private lenders issue mortgages and short-term loans, just as banks do, except in cash, likely derived from drug trafficking and other crimes.

Three of the lenders were caught carrying more than $600,000 in fentanyl-laced cash in 2016. They have collectively registered more than $20-million in mortgages and other debts against multimillion-dollar homes in recent years.

The Globe identified a sample of 45 properties in all, where such lenders claimed a $47-million stake, which represents just a fraction of the scope of the enterprise in B.C.

The lenders are repaid in clean money, plus interest, through loan payments or payouts when the homes are sold.

Their target customers are wealthy newcomers from China, who already own property in Canada, but are looking for extra cash. The borrowers often have money overseas, but are unable to transfer it to this country, because China doesn't allow its citizens to take more than US$50,000 a year abroad.

Mr. Eby called it a "massive priority" for the government to end the practices, without delay. Over the weekend, he said, he instructed former RCMP deputy commissioner Peter German, who is investigating money laundering in casinos, to expand his probe to include real estate lending. Mr. German is expected to deliver his report next month, which Mr. Eby says will inform the government on what changes will be most effective.

"We do understand the urgency but we also understand the need for our response to be as comprehensive as possible," he said.

Some of the lenders The Globe identified have been well known to police for years, for alleged drug trafficking and money laundering on an international scale. When asked why none has been charged, Mr. Eby said police are "very engaged" and there is "an active investigation."

The government regulator that oversees mortgage brokers said it is also launching a probe because it has the power to fine anyone issuing mortgages without a broker's licence.

"We are ultimately able to pursue jail time … we treat this very seriously," said Chris Carter, registrar of mortgage brokers for the B.C. Financial Institutions Commission.

The money lenders that The Globe looked into are unlicensed and some charge annual interest rates ranging from 40 per cent to 120 per cent. Canada's maximum legal rate is 60 per cent.

"What you would appear to have is predatory practices and vulnerable consumers … that is squarely within the type of activity we are concerned about," Mr. Carter said.

An agency that analyzes international money-laundering schemes said regulators in other provinces should take heed.

"I doubt it's just a Vancouver problem. We have the same lack of transparency within the real estate sector across Canada," said James Cohen, director of policy and programs for Transparency International Canada.

"Private lenders and mortgage brokers aren't required to do little if any reporting, and in the real estate sector there is not much follow up. We are a little asleep on how bad it is here."

The transactions The Globe uncovered were made possible by B.C. solicitors who registered mortgages and filed court claims on the lenders' behalf. The federal government says it is now working on new rules to make that more difficult.

Lawyers currently don't have to report suspicious transactions to FinTRAC, the federal agency that monitors money laundering, because law societies fought that requirement in the Supreme Court of Canada and won. A spokesperson for the federal Finance ministry says new legislation is in the works that could effectively override that ruling.

"A recent risk assessment carried out by the Government of Canada found that the legal sector poses a high risk of money laundering," spokesman Jack Aubry said.

"It is the Department of Finance's intention to develop constitutionally compliant legislative and regulatory provisions that would subject legal counsel and legal firms to the [anti-money-laundering regime]."

Meanwhile, about 150 people showed up at a rally in downtown Vancouver Sunday afternoon aimed at pushing the province to make housing more affordable, in part by providing more money in this week's budget to crack down on illegal market activity.

"We need a crime task force or a criminal investigation into the real estate industry," co-organizer Brad Barrett said.

"Nobody is playing the role of the regulator," said David Chen, a financial planner who spoke at the rally. "We need our governments to fulfil their duty to us and become that regulator."

Mr. Eby insisted it is one of his top priorities is to do just that.

"It is a huge personal priority for me and I am engaged in it very fully," he said.

"I believe we are taking all the steps necessary aimed at closing these loopholes and getting B.C.'s international reputation back on track."

With a report from Mike Hager

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