Money Laundering Fueling Canadian-Chinese Luxury Car Trade
From wire transfers to grocery bags of cash, straw buyers deliver Astons, Lambos and more, pocket sales-tax refunds.
China loves foreign makes when it comes to luxury cars. Aside from Buick and Cadillac, there are plenty of Aston Martins, Lamborghinis, Porsches, AMGs, and Bentleys on the roads in China. Yet, owning one is a very expensive proposition, more so than it would be over here in the States or up north in Canada.
Thus, those desiring such luxury rides have tapped into a lucrative import/export scheme involving straw buyers in Vancouver, British Columbia. Bloomberg reports that this scheme is the latest problem the Pacific Northwest city is dealing with in regard to money laundering.
“This report is disturbing confirmation that money laundering in British Columbia is a problem that goes beyond our casinos,” said British Columbia Attorney General David Eby of the report into the newest addition of the money laundering probe. The report describes the import/export gray market trade boom is an “ideal” method for laundering money, too.
The act itself, however, is legal: Chinese consumers wanting only the finest luxury rides select a local buyer a Rolls-Royce, a Jaguar, a Ferrari, or whatever else they want, who then exports the desired vehicle off to China. The buyer then files a sales-tax refund claim for the exportation, which can net as much as 20% of the purchase price.
However, according to independent investigator Peter German, the author of the report, the potential for money laundering comes with the methods chosen for the purchase, ranging from anonymous bank drafts to straight-up grocery bags full of cash. Along with the need for an “underground banker” to handle those large transactions, as well as the fact dealerships accept big bucks without too many questions, means laundered money can enter the picture at any time.
As for how many vehicles leap across the Pacific, the report says 4,400 left Vancouver for China in 2018, a big jump over the 100 sent over on container ships in 2013. Meanwhile, the straw buyers raked in over $63 million in refunds, prompting the provincial government to hire more staff to handle said refunds.
On the other end, the report said the consumers would use “multiple, small international wire transfers to different accounts to buy cars” in order to get around China’s capital controls. Said transfers include Chinese apps and financial services like WeChat Pay and UnionPay, which the report notes makes tracking down potential money laundering harder to do.
For now, though, the provincial government has plans to tighten regulations on luxury car sales and the refunds that come from exporting them.
Photos: Aston Martin Vancouver Facebook, Rolls-Royce Motor Cars Vancouver Facebook, Porsche Centre Vancouver Facebook, and Lamborghini Vancouver Facebook
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