Sasha Caldera, campaign director of Beneficial Ownership Transparency at Publish What You Pay Canada, an anti-corruption non-profit, works at his office in downtown Toronto on May 23, 2024.Laura Proctor /The Globe and Mail
Public registries created by Ottawa, British Columbia and Quebec to allow people to find a corporation’s hidden owners have made it more difficult for criminals to funnel their ill-gotten gains into shell companies, an expert has told an international conference.
But other provinces and territories, such as Ontario and Alberta, have not yet created such registries – which means the true ownership of more than half the companies registered in Canada remains hidden from the public, Sasha Caldera told Wednesday’s Journalism Under Siege conference in Vancouver.
That is a major reason why Canada will continue being a global destination for money-laundering, said Mr. Caldera, a Toronto-based beneficial ownership campaign manager for Publish What You Pay Canada, a non-profit advocacy group fighting corruption in the country’s natural resources sector. An amount equal to up to 5 per cent of Canada’s GDP is estimated as being laundered through the country each year, a phenomenon now called “snow-washing,” he said.
“Ontario happens to have a million corporations registered in the province, so that’s a huge gap that needs to be shut down,” Mr. Caldera said in his presentation at the conference, which was sponsored by a trio of anti-corruption organizations and that hosted journalists and media experts from around the world.
Quebec launched its public registry for corporations last spring, Canada’s federal system opened this January and B.C. is set to introduce its own next year. But those will only cover roughly 43 per cent of the companies registered in the country, Mr. Caldera said.
These registries comply with people’s Charter right to privacy by only disclosing the name of the corporation, the beneficial owner’s name and the company’s address for service, while keeping other sensitive information hidden from the public, he said.
Ontario collects this information on hidden ownership but keeps it all private, while Alberta doesn’t require corporations to record if someone has a secret stake in their enterprise or disclose who that may be, he said.
The Organisation for Economic Co-operation and Development’s Financial Action Task Force has given Canada a failing grade in 2016 and 2021 on its efforts to give people transparency of corporate ownership. Experts agree these registries are one of the most powerful tools a government can deploy against money laundering, tax evasion and terrorist financing.
Mr. Caldera said these registries act as an effective deterrent to organized criminals and corrupt officials from around the world keen to avoid attention from the public, the media and any authorities seeking to trace and freeze their assets.
“If you knew that your name would be publicly searchable and attached to the asset where you’re trying to hide that money, you would think twice,” he said in an interview.
In 2019, The Globe and Mail was offered a small snapshot into the activity from one defunct bank. The Globe pored over a massive leak of more than 1.5 million transaction records from Lithuania’s Ukio Bankas − which collapsed in 2013 and was the subject of multiple money-laundering investigations − as well as other sources. Companies with Canadian addresses played a role in thousands of Ukio Bankas transactions, involving upward of US$200-million.
Mr. Caldera started his speech by highlighting a Russian company’s website as touting Canada as the ideal place to set up company (”cheaper than the United Kingdom”) to avoid and evade tax.
“This kind of advertisement is widespread among what we call corporate service providers,” Mr. Caldera said, citing evidence from the international news investigations labelled the Panama Papers, Paradise Papers and FinCEN Files.
He highlighted a recent federal study as estimating that between $47-billion and $115-billion may be laundered through Canada every year.
Vincent Cheng Yang, a former law professor at the University of Saint Joseph in Macau who is now a senior associate at the International Centre for Criminal Law Reform & Criminal Justice Policy at the University of B.C., told conference delegates that Canada remains a safe haven for foreign criminals and corrupt officials, especially wealthy ones.
That’s largely because financial crime enforcement is ineffective, he said in an interview.
“It’s public knowledge that the Canadian system is very, very lenient,” Dr. Yang said.
Adam Ross, a Vancouver-based partner with Templeton Research, which works for institutional investors and financial institutions around the world, concurred. He said the Canada Revenue Agency needs to enforce tax laws better as well as share more information with the federal money laundering watchdog − the Financial Transactions and Reports Analysis Centre of Canada − and all police agencies.
Mike Hager