International students and offshore banking flagged in Canadian real estate money laundering

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In August 2012, a 19-year-old pupil from Guangdong arrived from the Dominican Republic to Montreal with $23,800 successful euros and U.S. dollars stuffed into his backpack. Four months later, Zhang Guanqun purchased an 8,500-square-foot mansion successful Coquitlam, B.C., for $2.1 million.

It was lone 1 of Zhang’s galore multimillion-dollar transactions portion attending Coquitlam College. From astir 2012 to 2015, Zhang would funnel astatine slightest $33.75 cardinal successful physics funds and currency done Canadian and Hong Kong slope accounts.

As it turned out, however, the Canada Border Services Agency and Fintrac, Canada’s anti-money laundering watchdog, had agelong been monitoring Zhang’s movements. They watched his parents, too. While surviving successful Markham, Ont., they were wanted successful China for allegedly defrauding 60,000 investors of astir $200 cardinal successful a pyramid scheme, according to filings successful a Federal Court lawsuit involving a exile assertion by the parents.

The filings by CBSA and Fintrac, whose accusations were not ruled connected by the court, uncover details of the analyzable investigation. Zhang, present 28, successfully fought a deportation lawsuit based connected CBSA accusations that helium was progressive successful wealth laundering schemes and transnational organized crime.

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“The magnitude of funds that Zhang has been progressive successful receiving and transferring ligament transfers is genuinely astonishing,” an October 2015 forensic accounting study filed with the tribunal successful CBSA’s lawsuit states.

“The currency transactions were larger than 1 would expect, from an unemployed student.”

Over 600 pages successful the CBSA filing mostly absorption connected Zhang and related cases against his parents, Wang Zhenhua and Yan Chungxiang. The mates arrived successful Canada six months aft Zhang landed successful Vancouver, and close away, according to Fintrac records besides filed successful the Federal Court proceedings, they appeared to beryllium utilizing existent estate, ammunition companies and overseas citizens successful elaborate steps of wealth laundering.

“The pursuing enactment raises reddish flags for layering (a benignant of wealth laundering) and imaginable taxation evasion due to the fact that of a precocious measurement of ligament transfers from a overseas jurisdiction and from antithetic individuals were received,” 1 Fintrac study connected Wang and Yan said.

CBSA and Fintrac besides recovered it suspicious that Yan Chungxiang and Wang Zhenhua — who besides went by the Dominican sanction of “Antonio” — utilized a fig of aliases.

CBSA’s files names dozens of radical successful China, Canadian instrumentality firms, a salient national Liberal Party organizer and adjacent a Dominican Republic authoritative successful the country’s visa renewal department. They besides outline a overmuch broader interest of superior formation from China and secretive offshore banking routes done Hong Kong and Caribbean taxation havens, which let corruption suspects to tone their gains abroad, bargain passports of convenience, and fell soiled wealth successful Canadian existent estate.

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The CBSA files supply a uncommon glimpse into an opaque concern exemplary progressively cited successful examinations of Canadian existent estate, successful which relatives usage overseas students arsenic fronts to funnel wealthiness into condos and mansions.

Evidence successful B.C.’s existent enquiry into wealth laundering, the Cullen Commission, asserts the concern of “student” is often utilized to bargain luxury real-estate successful B.C. In 1 example, committee lawyers recovered that a landowner successful China accused of bribery — present facing deportation hearings successful Vancouver — had transferred at slightest $114 million from a Chinese state into British Columbia done Hong Kong currency exchanges with links to organized crime.

The antheral and his household members — whose identities were redacted successful Cullen Commission documents — bought astatine slightest $30-million worthy of B.C. property, and the corruption suspect’s girl bought a $14-million Vancouver mansion, listing her concern connected the onshore rubric arsenic “student.”

A leaked June 2008 Bank of China report, cited by the Cullen Commission, draws the aforesaid conclusion. A survey connected “Methods of Transferring Assets Outside of China by Chinese Corruptors” suggests that offenders inquire relatives, particularly their children, to survey oregon enactment successful the places wherever they live. They besides usage students to bargain “immovable assets” including homes.

(Critics person noted assertions connected corruption from Chinese state-owned entities and regulators sometimes request to beryllium viewed with caution, due to the fact that the Chinese authorities often uses its justness strategy for governmental objectives.)

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Transparency International Canada, the anti-corruption watchdog, has studied luxury existent property trends successful Vancouver, and finds that  “student” buyers were a important concern. Executive manager James Cohen, who scanned immoderate of the Guanqun Zhang lawsuit files obtained by Global News, said “this is simply a lawsuit survey pointing to a exemplary we person been red-flagging for a portion now.”

Money way starts adjacent Beijing

In February 2011, from their bureau successful Tianjin, a larboard metropolis adjacent Beijing, Zhang’s parents, Wang Zhenhua and Yan Chungxiang, started an concern and consulting company, Yingxin Equity Investment, and began raising funds.

But wrong months an capitalist complained to police, according to a lawsuit summary from China’s Public Security Bureau (PSB), filed successful the Federal Court proceedings by CBSA, and successful September 2011 constabulary started probing suspicions that Yingxin was a pyramid scheme. One period later, Yan travelled from Shenzhen to Hong Kong. And successful December 2011, constabulary arrested Wang Zhenhua connected allegations helium fraudulently “seduced” thousands of Chinese citizens to put successful Yingxin Equity.

Wang, a gangly man, uncharitably described arsenic “fat” successful PSB reports, was released connected bail successful January 2012, and travelled to Hong Kong. It was Wang’s archetypal step, alleged successful an Interpol Red Notice, successful “absconding” to Canada.

In April 2012, their lad landed astatine the  Vancouver airport, presenting an planetary pupil visa. He had concisely studied astatine a Catholic precocious schoolhouse successful New Jersey, and was past acceptable to survey astatine Coquitlam College. In this suburb conscionable eastbound of Vancouver, helium purchased a mountainside mansion — implicit with six bedrooms and 7 bathrooms — with much than $2 million.

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And instantly aft Zhang landed, successful the abstraction of astir 14 weeks, the pupil received astatine slightest $10.2 cardinal from companies controlled by his parents successful Singapore and Hong Kong. His parents would soon travel him to Canada.

Federal tribunal records bespeak that the mates arrived successful September 2012, entering with visas issued by the Canadian embassy successful the Dominican Republic. In the aforesaid month, backmost successful Wang’s location state of Jilin, 1 of his co-accused was sentenced to 4 years successful situation “for participating successful Yingxin Company’s pyramid selling activities,” PSB documents indicate.

Wang and Yan resided successful Markham, Ont., wherever they acceptable up a institution called MixCulture Capital with a section mates from China.

MixCulture’s ngo was unclear. On 1 hand, it purported to beforehand tourism done the solemnisation of Chinese, Canadian and Dominican traditions. It was besides described arsenic an concern money for a $5.3-million parcel of properties purchased by Wang and Yan successful Tweed, Ont., a bucolic mounting southbound of Algonquin Park. In different iteration, it was expected to beryllium a currency speech and wealth transportation business, according to Ontario civilian tribunal records successful a lawsuit wherever Wang and Yan claimed to person been defrauded.

But erstwhile relations betwixt MixCulture’s directors went sour successful precocious 2013, according to CBSA filings, 1 of the directors, Chen Xi, reported to York Regional Police that Wang and Yan had transferred from $40 to $50 cardinal to their son, and Chen alleged the funds progressive “fraud and wealth laundering.”

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Fintrac filings amusement that besides successful precocious 2013, Zhang Guanqun started wiring monolithic funds retired of his accounts, completing $17.5 cardinal successful transfers successful 4 months, to accounts successful Hong Kong, Saint Kitts and Nevis, Markham and Vancouver.

Meanwhile, CBSA flagged transactions betwixt MixCulture and Glenis Guzman, a Dominican Republic authoritative liable for visa renewals astatine the country’s embassy successful Ottawa. A Fintrac suspicious transaction study says that successful November 2013, Guzman was wired $20,000 from MixCulture.

The authoritative instantly attempted to retreat US$20,000 cash, the study says, telling her Bank of Montreal subdivision she needed to nonstop the funds to the Dominican Republic. Instead, the subdivision provided Guzman a US$20,000 slope draft, payable to an Ottawa currency exchange.

An probe connected the funds from MixCulture to fraud, and since Guzman moved the funds done her relationship with analyzable steps that appeared to beryllium a wealth laundering method known arsenic “layering” — a Fintrac study filed successful tribunal named her arsenic a fishy successful washing MixCulture’s proceeds.

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Ontario tribunal records amusement that Wang and Yan obtained impermanent nonmigratory visas for Canada successful the Dominican Republic successful September 2013, and that they arrived successful Canada connected November 30, 2013, 2 days aft MixCulture transferred US$20,000 to Guzman’s accounts.

In effect to questions from Global News connected the case, the Dominican Republic stated: “Mrs. Guzmán Felipe concluded her posting astatine the Embassy of the Dominican Republic successful Canada successful July 2018, truthful we volition guardant your connection to the Department of Legal Affairs of our Ministry of Foreign Affairs to unfastened an probe connected this matter.”

According to the Fintrac filings, Wang and Yan acceptable up aggregate Canadian slope accounts, informing bankers they were existent property tycoons with decades of acquisition successful China. And they purchased astatine slightest 7 properties successful Ontario alone.

The Fintrac records besides accidental MixCulture, its directors, and Guanqun Zhang were progressive successful $86-million worthy of  Canadian transactions. Wang — the begetter — received 29 ligament transfers from 29 antithetic Chinese radical to an HSBC account, successful respective days.

All the transactions were related to students, and purportedly to money tuition, question and surviving expenses. In different Fintrac report, investigators noted it was highly antithetic that Wang received 200 ligament transfers to his CIBC relationship from dozens of antithetic radical successful China.

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These transactions raised “red flags for layering [a wealth laundering technique] and imaginable taxation evasion,” Fintrac records say.

As CBSA watched with mounting suspicion, they hired a forensic accountant to audit Zhang’s banking.

In October 2015, the report, filed successful the Federal Court proceedings, concluded Zhang’s acquisition of a $2.1-million location successful Coquitlam, which helium sold for $1.9 cardinal successful nether 2 years, was “highly suspicious, and could beryllium considered an effort to integrate funds which helium had received from his parents.”

It was 1 of astatine slightest 5 properties Zhang purchased successful B.C., including a mansion successful Richmond that Zhang bought for $3.15 million, onshore titles filed successful Federal Court show.

The accountant besides recovered that Zhang’s transfers of $4.9 cardinal to a British Virgin Islands-registered institution appeared to beryllium “smurfing” — a money-laundering method “often utilized to interruption up the magnitude of currency deposit into smaller amounts to debar authorities reporting requirements oregon trim suspicion astatine the section bank,” the study said.

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Fintrac besides flagged different transfer: $4.5 cardinal to a institution successful Barbados, ranked among the world’s top-15 countries for suspected money-laundering transfers.

CBSA’s forensic investigation spotlighted respective different radical progressive successful Zhang’s transfers. One was a Saint Kitts lawyer named Fitzroy Eddy, who received a US$10,387 ligament transportation from Zhang’s CIBC account. Online records successful the “Paradise Papers” — a database of leaked records related to offshore banking — amusement a antheral named Fitzroy Eddy providing offshore spot relationship and immigration-investment services. The address from the papers shows up connected Zhang’s ligament transfer.

Eddy did not respond to emails and telephone calls requesting remark from Global News.

International students and offshore banking flagged successful  Canadian existent  property  wealth  laundering - image

The accountant besides zeroed successful connected a narration betwixt Zhang Guanqun, a “businessman” from Shenzhen named Jiuju Wang who banked successful Hong Kong, and Xin (Richard) Zhou of Thornhill, Ont.

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At the time, Xin Zhou was connected the payroll of Ontario’s provincial Legislative Assembly arsenic a “community outreach” authoritative nether the authorities of erstwhile Ontario Liberal premier Kathleen Wynne, a Fintrac study says. A Fintrac disclosure adds that Zhou’s reported yearly wage successful Canada was $26,000.

In 2014, Zhou was besides fundraising co-chair for the national Liberal Party, his LinkedIn illustration says. Zhou concisely roseate to prominence arsenic a pivotal assemblage organizer for Justin Trudeau’s 2016 campaign. In a fewer months, from 2013 to aboriginal 2014, Guanqun Zhang sent $2,999,985 to Richard Zhou. He besides wired $6.3 cardinal to Jiuju Wang successful Hong Kong. And Jiuju Wang sent Zhou $800,000 from Hong Kong.

A Fintrac suspicious transaction study recovered Richard Zhou’s “account enactment is inconsistent with customer’s stated concern … (and Zhou’s bank) was incapable to ascertain root of funds, (of) incoming and outgoing wires to chartless 3rd parties and concern entities.”

Fintrac besides flagged $522,985 coming from Zhou’s accounts to a fig of migration and litigation instrumentality firms.

According to Fintrac, these incoming and outgoing transactions raised suspicions, but erstwhile Zhou’s slope asked him to explicate “he refused to supply details oregon his narration to the remitters.”

A Fintrac suspicious transaction study details fiscal transactions flowing from Xin Zhou’s accounts to assorted instrumentality firms.

When Zhou’s slope pressed him connected “the root of the incoming wires,” helium explained that “the quality of his concern is to supply assistance to overseas students with arranging lodging needs and schoolhouse applications.” The tribunal did not regularisation connected the allegations regarding Zhou. Zhou has not yet responded to aggregate requests for remark from Global News connected email and phone.

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Since CBSA detained them successful 2014, Wang Zhenhua and Yan Chungxiang person fought deportation, including filing a civilian lawsuit that accused unidentified CBSA officers of wrongdoing. Court filings amusement from 2015 to 2018, agents searched and questioned Zhang whenever helium re-entered Canada.

In March 2016, Zhang returned from a buying travel successful Washington state, and a CBSA serviceman reported that his telephone texts showed that helium had bought a condo for $366,000 successful Richmond, conscionable extracurricular Vancouver, utilizing a section lawyer. When Zhang returned to Vancouver from Hawaii 2 months later, a hunt of his telephone showed helium had precocious purchased 2,000 shares of the Canadian pharmaceutical institution Valeant, successful a $168,000 transaction.

Lorne Waldman, who represented Wang and Yan successful their exile claim, said helium nary longer represents the mates and helium could not remark connected their lawsuit oregon constituent to different typical for them. Global News could not get a effect from 3 different lawyers that person represented the couple.

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From 2016 to 2018 Fintrac continued to ticker Zhang closely, reports show, flagging $7.29 cardinal worthy of transactions, successful 27 physics money transportation reports and 1 suspicious transaction report. In 2018, CBSA prepared an inadmissibility study against Zhang which was referred to the Immigration and Refugee Board for deportation.

In effect to questions from Global News, Guanqun Zhang’s migration lawyer Lawrence Wong noted that successful July 2021, a national tribunal justice acceptable speech Public Safety Canada’s determination to nonstop Zhang to an admissibility proceeding connected money-laundering suspicions. The determination granted Zhang a judicial reappraisal of CBSA’s lawsuit and did not regularisation connected Fintrac’s allegations.

Wong, who was asked to remark connected Fintrac records regarding Zhang and connecting his lawsuit to Richard Zhou and others named successful the transaction reports, disputed Fintrac’s grounds arsenic disputed and inaccurate.

“Fintrac documents look to beryllium your main root and they are axenic unsourced hearsay,” a lawyer responding for Wong stated. “They were fixed nary value by the Federal Court and aft the Federal Court acceptable speech the Minister’s Delegate referral; the Minister’s Delegate decided not to bash different referral by closing its file. The court’s determination has brought the process to an end.”

In a response, Fintrac would not reply circumstantial questions astir its reporting successful the Zhang case, but stated, “Fintrac’s fiscal quality is close and valued by Canada’s instrumentality enforcement and nationalist information agencies.”

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CBSA said it would not remark astir ongoing cases.

But according to Clarence Lo, the CBSA serviceman who concluded the allegations Zhang was engaged successful wealth laundering were sufficiently well-founded to notation to the Immigration and Refugee Board, the lawsuit boils down to whether the planetary pupil was “merely” pursuing his parents’ directions, oregon knew what helium was doing, portion “actively progressive successful the receiving oregon transferring since his accomplishment successful Canada (of) tens of millions of dollars.”

“The numbers connected the Fintrac reports are hard to ignore,” Lo wrote successful his December 2017 deportation recommendation. “It takes a reasonably astute idiosyncratic with fiscal savvy to implicit that galore ligament transfers of important amounts implicit a agelong play of time.”

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