Seizures of undeclared cash spike at Vancouver International Airport

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As Vancouver's housing market began sizzling, border guards at the nearby international airport were seizing millions of dollars in undeclared cash from Chinese citizens, with total amounts jumping 50 per cent in each of the past three calendar years, government data show.

According to the information, released to The Globe and Mail by a New Democrat MLA, during that period, border guards confiscated more than $13-million in hidden currency from 792 Chinese people passing through Vancouver International Airport, which is Canada's second-busiest after Toronto. The average person had $17,000 in hidden bills, bank notes or drafts.

That is in addition to the $323-million declared at the airport by 20,000 Chinese citizens or passengers on flights to and from that country, during roughly the same period, according to data released to The Globe through a freedom of information request.

Related: Vancouver home sales hit four-year low in wake of foreign-buyers tax

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Experts say these sums of hidden and declared money, which dwarf the funds brought through the airport from other countries, were likely carried by some of the 922,000 people from China recently given 10-year temporary visas, which allow them to visit for up to six months at a time.

Former RCMP investigator and financial crimes specialist Kim Marsh said many travellers bring large amounts of money – or bank notes or drafts – instead of transferring them through institutional routes because they want to avoid paying taxes in Canada and get around Chinese currency laws that make it illegal for the average citizen to take more than $50,000 (U.S.) a year out of that country.

"There's a lot of people coming in here and buying a $5-million house and saying they don't have any money, they're penniless," Mr. Marsh said.

"One of the reasons you see people parking money in the real estate industry is because there's concerns about China's economy," he added.

Daniel Kiselbach, a Vancouver-based tax litigator, said the vast majority of Chinese citizens bringing large amounts of cash into B.C. are "just trying to get along in life and they have legitimate reasons for having the money in their possession," such as buying gifts for family members or paying for living expenses at university.

He said that these visitors have many disincentives to report their assets to the Chinese government and are likely just as suspicious of how information on their finances will be handled in Canada.

"Maybe that would get back to the Chinese government, I don't know," Mr. Kiselbach said.

Two years ago, Mr. Kiselbach tried to get Ottawa to divulge whether it has an agreement to share such information with China, as it does with the United States and other Commonwealth countries. Canada Border Services Agency does not make these agreements public, he said.

Vancouver MLA David Eby, housing critic for the opposition New Democrats, said he is concerned that the amount of cash seized from Chinese citizens at YVR rose from $2.8-million in 2013 to $6.4-million last year.

"There is an ongoing debate about international money in our real estate market and what the trendlines are," said Mr. Eby, who made a Freedom of Information request for the airport seizure data, which he provided to The Globe. "You have to look at indicators of the flows of international money and one of those is money that keeps coming into the airport.

"The concern that we've had for a while is that there are people buying real estate with money that is not local which hasn't been taxed locally, which hasn't been earned locally, which is distorting the market."

Last month, the provincial government applied a 15-per-cent levy on foreign Metro Vancouver home buyers after five weeks of official data showed that Chinese buyers were involved in about one in 10 purchases across the region earlier this summer. As the market grappled with the new tax, home sales last month in the region hit their lowest August levels in four years.

Earlier this year, B.C.'s Liberal government rejected a bill tabled by Mr. Eby's party aimed at taxing foreign capital in Metro Vancouver. That bill called for increased property taxes for home owners who do not pay income tax in British Columbia.

"That money could be brought in by someone who's a permanent resident, by someone who's a citizen, it's impossible to know," Mr. Eby said of the seized cash. "Our tax policy should be that it taxes the international money that isn't otherwise taxed here in B.C. when it goes into real estate."

Anyone can bring as much money as they want in or out of Canada as long as they declare any sum of $10,000 or more – otherwise it could be seized. Border guards at Vancouver airport confiscated $19-million in undeclared cash from 2013 to 2015, with almost three quarters of it belonging to Chinese citizens. (Upwards of 3,200 passengers arrive each day from flights originating in Hong Kong and mainland China, according to data from the airport.)

Experts say Chinese travellers could have several reasons for not declaring assets.

Mr. Kiselbach added that CBSA likely ramped up the scrutiny on Chinese passengers because it gives increased attention to citizens from countries deemed a high risk for activities such as money laundering and financing terrorism.

Hayley Howe, an anti-money laundering expert at Vancouver-based consulting firm MNP, said many foreign visitors may be unaware of Canada's currency reporting requirements or unable to read the customs form properly when they enter or exit the country.

People can get seized money back by appealing to the Canada Border Services Agency and providing a paper trail – or affidavits from witnesses – that proves the cash was not earned through criminal acts. If they win their appeal, they can pay a fine of up to $5,000 to get their money returned.

The federal agency could not provide data on how much of the $13-million it seized from Chinese travellers was reclaimed, a process that can take several months.

Mr. Kiselbach said only those missing large sums of money or people concerned with having a squeaky-clean customs record go to the trouble of hiring a lawyer and going through the appeal process.