Posted on 02/07/2024 5:05:05 AM PST by TigerClaws
The whistleblower, a Canadian business school graduate, was staggered by the suspicious home loans he discovered in 2022 when he joined a mortgage approval team in a small HSBC branch on the outskirts of Toronto.
He knew of suspicions surrounding Chinese capital in British Columbia real estate, but had never witnessed shady lending while working at an HSBC branch in Campbell River, a bucolic town on the coast of Vancouver Island.
When he arrived at HSBC’s bank in Aurora, an affluent suburb north of Toronto, he discovered explosive growth in home loans to Chinese diaspora buyers during the Covid-19 pandemic.
Chinese migrants living across Toronto were obtaining mortgages from HSBC while supposedly earning extravagant salaries from remote-work jobs in China. In one example, an Ontario casino worker that owned three homes also claimed to earn $345,000 in 2020 analyzing data remotely for a Beijing company.
Before joining HSBC Canada, the whistleblower had studied fake-income mortgage frauds for his Business Masters degree at Vancouver Island University. After arriving at Aurora in February 2022, while digging into the branch’s loan books and interrogating his colleagues, he made mind-blowing assessments.
Since 2015, the whistleblower concluded, more than 10 Toronto-area HSBC branches had issued at least $500-million in home loans to diaspora buyers claiming exaggerated incomes or non-existent jobs in China.
These foreign-income scams spiked during the pandemic, the whistleblower believed, because borrowers could somewhat plausibly claim to be working remotely in other countries while riding out Covid-19 in Canada.
While a small bank of Aurora’s size was expected to issue about $23-million in residential loans every year, this branch had shovelled out $88-million in mortgages in 2020, according to the whistleblower, and over $50-million in 2021.
The whistleblower, whomThe Bureau is calling D.M., immigrated to Canada as an international student from India, making him a minority among mostly Chinese-Canadian co-workers at the Aurora branch.
As D.M. probed his colleagues, his belief gained conviction, that HSBC Canada and other Canadian banks including CIBC had systemic problems with highly questionable mortgages issued to diaspora buyers with unverified sources of wealth in China.
Losing sleep, in April 2022, D.M. sent an audacious email to senior bank executives: “I am going to reveal potential mortgage fraud at HSBC Bank Canada and possibly some employees benefited from the fraud, financially pocketing thousands of dollars, which I call the proceeds of crime.”
D.M.’s explosive four-page complaint triggered an internal investigation that led to some reforms at HSBC Canada according to internal emails obtained by The Bureau.
But more than a year later, D.M. was so dissatisfied with the bank’s response that he risked sharing his story and numerous internal documents for an unprecedented journalistic investigation into Canada’s housing affordability crisis.
“I found out a huge mortgage fraud showing borrowers with exaggerated income from one specific country, China, pretending to be working remotely,” D.M. informed The Bureau in June 2023. “I believe the housing prices in Toronto are linked to this, because this is about income verification in banks, which is supposed to moderate demand.”
The Bureau asked HSBC Canada to review emailed information for this story and provide an appropriate manager for an interview regarding D.M. 's records and allegations.
“I won’t have anyone to speak with you directly,” Sharon Wilks, Head of Communications, responded. “But for context: As a global bank, HSBC is at the forefront of efforts to identify, prevent and deter financial crime … We will not do business with individuals or entities we believe are engaged in illicit conduct.”
Wilks added that HSBC Canada “can and do regularly exit relationships with clients whose activities we deem too risky.”
The Bureau’s seven-month investigation into D.M.’s allegations suggests HSBC Canada and other Canadian banks could have issued many billions of dollars in questionable mortgages to Chinese diaspora buyers, and a significant cause of Canada’s real estate bubble is hundreds of billions in illicit fund transfers from China into Canada, and bank lending that amplifies its impacts, especially in Toronto and Vancouver home prices.
“There are thousands of these cases, large scale,” D.M. said in an interview. “Hardworking Canadians are denied mortgages and these Chinese residents forge documents and get mortgages approved, heating up the already hot Ontario real estate markets.”
“These people don’t have steady jobs or income in Canada,” he alleged, “but what they are doing is scams to launder money, and get mortgages using fake documents.”
The Bureau’s investigation included asking seven prominent Canadian experts to assess some of D.M.’s documents, allegations and conclusions.
This investigation suggests D.M. 's calculation is plausible, that the Aurora branch and other Toronto-area HSBC branches have issued at least $500-million in questionable Chinese income loans since 2015.
But D.M’s findings could also change the public’s understanding of housing affordability in Toronto and Vancouver, a politically explosive issue expected to frame Canada’s upcoming federal election.
This is because, according to the academics and criminologists that reviewed D.M.’s documents with The Bureau, his evidence fits into FINTRAC’s much broader examinations of suspicious real estate and banking transactions.
In 2023, the anti-money laundering watchdog published a ground-breaking study into 48,000 Chinese diaspora banking transactions.
FINTRAC found that during the Covid-19 pandemic, because Canadian casinos were closed, Chinese underground banking schemes evolved, flooding electronic fund transfers from Hong Kong into Canadian bank accounts that served like corridors for murky real estate transactions.
The Bureau’s analysis also finds that what D.M. discovered in Toronto banks, finally sheds light on mysterious capital flows discovered by a prominent Canadian academic in 2015, in a study of Vancouver land titles and mortgages.
That examination of $525-million worth of real estate purchases in a six-month period found 66 percent of buyers in several affluent neighbourhoods were recent Chinese diaspora migrants, and most mortgages went to buyers with little or no income in Canada.
Similarly, what D.M. found in his probe of pandemic-era loans could be called the evolving “Toronto Method” of an underground banking system discovered first in Vancouver, and found to be laundering a stunning $1.2-billion in cash from Mainland China through British Columbia government casinos in 2014.
This system of shadowy transfers was dubbed the “Vancouver Model” by an Australian professor, and brings together transnational organized crime, affluent Chinese nationals seeking to export their wealth abroad, and Canadian casinos, banks and real estate, in transactions that evade policing because the pivotal cash exchanges are done off the books by professional money launderers serving the global Chinese diaspora.
According to FINTRAC’s 2023 study of 48,000 pandemic-era transactions, this evolving Vancouver Model network “simultaneously facilitates money laundering and the circumvention of Chinese currency controls”
“As a result of the temporary closures of Canadian casinos due to the COVID-19 pandemic, professional money launderers began to diversify their money laundering methods,” FINTRAC’s study says.
“During this time, FINTRAC observed a rise in money laundering typologies involving transferring large sums of funds to Canada from foreign money services businesses, often located in China, notably Hong Kong, and the laundering of the funds primarily through the real estate, securities, automotive and legal professions.”
These wire transfers from China were routed into bank accounts of “multiple, unrelated individuals in Canada,” that served as “money mules” in byzantine networks involving Canada-based real estate developers, real estate agents, mortgage brokers and banks.
These Chinese diaspora bank account owners often claimed they were students, homemakers, office managers, or unemployed, FINTRAC reported.
They sometimes used their accounts to send bank drafts to others in Canada for home purchases, or served as “straw buyers” for offshore investors.
“Mortgage payments are sourced from incoming funds from China,” FINTRAC’s alert said.
(More at source)
Bet this is happening in some high-Chinese U. S. Cities…
Open Borders! Diversity! It’s the religion that can not be questioned! See how awesome it is!
SF, NYC, etc
The US should not allow foreigners to own land.
HSBC stock hadn’t tanked, so this is not a big deal to the company.
Bigger worry.
These fake mortgages prolly issued at very low rates.
Soon, they will roll over at much higher rates
We should force HSBC to “Mark to Market” these loans on their books
2007: Lehman is healthy.
There are winners and losers. Grandpa and grandma Canadien (pr their heirs) sold their homes around Vancouver for way more than they would have otherwise. Ditto for Vancouver condo developers.
Nobody mentions the winners in these things.
As long as your family made a few bucks off the destruction of your city and country, then that’s all that matters.
There are no winners in situations like this because it hurts everyone in the long run. Others have to pay artificially higher prices for your alleged *win* by some.
I’m beginning to see the world differently as of late. I used to complain about Biden getting elected, open borders, endless foreign wars, Canada siezing bank accounts, LGBTQXYZ, men on girls sports teams, etc.
But I suddenly realized this morning that all of those things are mere symptoms of the real problem. The real problem? Western civilization has been in decline now for about 70 years and it’s reaching its end. To use an example, this is what is happening, and the “powers that be” really have no control so the problem is getting worse until it reaches the climax.
Here it is in video form. It starts imperceptible and ends in tragedy. I’m dead serious here, and my tag line is predictive. The video is short.
https://www.youtube.com/shorts/bWR-W02g6kY
It’s astounding how some people are so willing to sell their soul for a dollar.
Could this be happening here in the USA ?
I'll bet that this is also occurring here, too !
“Calvin Chrustie, a former RCMP transnational crime investigator whose recent report finds Canada’s weak regulations have made the nation a playground for underground banking linked to organized crime in China, Iran and Mexico, noted that in 2012, U.S. regulators hit HSBC with a $1.9 billion fine because of $881-million in suspicious transactions with Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel.”
Trudeau opened up his country to anyone who wanted to enter.
It’s probably too late to save Canada, even when they finally oust him.
“ But I suddenly realized this morning that all of those things are mere symptoms of the real problem. Western civilization has been in decline now for about 70 years and it’s reaching its end.”
“Politics is downstream of culture.” Andrew Brietbart.
L
I am not sure the implications of this are fully realized.
Let’s suppose that this is happening all across the US.
And that the loans are not just for houses, but for businesses as well.
Now consider the possibility that these loans are in virtually all financial institutions and amount to many billions.
What if the loans payments not supported by renters and business using the properties are supported by the Chinese government.
Either way, it is China in control of payments to the lenders.
What happens when China directs all payments to STOP?
I know a young family living in a rental condo outside Vancouver who are moving east because they can’t find a house for under a million Can. dollars (about $745,000 U.S.). They had thought about Calgary, but the prices there have increased so much, they can’t it either.
A hell of a lot more losers than winners.
And when you have more losers than winners, Revolutions happen.
You and me both.
Same in Australia, if you want a home within a radius of 30 miles of Sydney’s downtown, regardless of size, it’s at least a million dollars.
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