Wednesday, October 21, 2020

Canada missing 99.9 per cent of money laundering because of weak rules, expert estimates

-

Canada is likely missing 99.9 per cent of money laundering because of loose requirements and lenient penalties, according to the author of a C.D. Howe policy paper released Monday.

“Among Western liberal democracies, we’re down there with the weakest countries,” said Kevin Comeau, a retired lawyer and a member of Transparency International Canada’s working group on beneficial ownership transparency.

Canada has become a safe haven for dirty money and risks becoming even more attractive to criminals if provincial and federal governments don’t move quickly to introduce the same laws and regulations some European countries have adopted, Comeau said.

The International Monetary Fund estimates that two to five per cent of world gross domestic product is laundered money. Applied to Canada’s 2018 gross domestic product, Comeau estimates that between $100 billion and $130 billion a year is laundered through Canada.

- Advertisement -

A 2005 analysis of U.S. Treasury Department statistics shows that U.S. law enforcement agencies did not catch money launderers 99.9 per cent of the time. Comeau pegs the amount of money laundering that Canada doesn’t catch at about the same amount.

“There is no reason to suspect Canada’s failure rate is any better, although we do not know for sure,” Comeau wrote in his policy brief.

More: Chinese cash fuels vast luxury car laundering scheme in Canada

Money laundering is hard to catch and prosecute because it is an invisible crime committed by anonymous people, Comeau said. That’s because under Canada’s current laws, anyone can create a corporation or a trust and conceal who truly owns it.

- Advertisement -

For instance, some of Vancouver’s most expensive residential properties are held by corporations whose directors are lawyers; those lawyers are protected by solicitor-client privilege from revealing who their client is.

British Columbia introduced Canada’s first public land ownership registry after revelations that billions in “dirty money” from the proceeds of crime were likely laundered through the province’s casinos for years. The province is now probing the extent of suspected money laundering in the real-estate industry.

Comeau said B.C.’s new land-ownership transparency law is “terrific” but the public registry needs to be extended across Canada and should cover all companies and trusts, not just property ownership.

He’s calling for the creation of a publicly available registry of beneficial ownership for corporations, trusts and real estate, similar to the registry for companies the United Kingdom created in 2016, and a mandatory declaration of the beneficial owner (that is, the true owner) of corporations and trusts.

He’d also like to see strict penalties if people are caught making false declarations to the registry, similar to fines and jail time for Canadians who evade income tax.

The federal government did recently amend the Canada Business Corporations Act to require federally incorporated companies to collect and record beneficial ownership information.

However, Comeau points out in his policy paper, “not only is that information not accessible by the public, it is not even accessible by law-enforcement agencies and competent authorities such as FINTRAC (Canada’s financial intelligence agency for money laundering) and the Canada Revenue Agency.”

In an interview with the Toronto Star, B.C. Finance Minister Carole James warned that B.C.’s land-ownership registry could push more dirty money into other jurisdictions, such as the Toronto real-estate market, which experts say is already vulnerable to money laundering.

“As other countries strengthen their laws, we’re at risk,” Comeau said. “If you put in fines and meaningful prison time … the money launderers want to stay away from jurisdictions with strong enforcement.”

MUST READ

Germany issues international arrest warrant for founders of law firm at the centre of Panama Papers

Germany has issued international arrest warrants for the two founders of the firm at the centre of the tax haven scandal exposed by the...

Goldman to pay over $2 billion in DOJ’s 1MDB Probe

Goldman Sachs Group Inc. has reached a long-awaited pact with the U.S. Department of Justice to pay more than $2 billion for the bank’s...

Ex-managers of Security firm pleads guilty in Santa Clara County concealed gun permit bribery scandal

Two former managers of a Silicon Valley international security firm pleaded guilty Monday to charges related to a bribery scheme to obtain concealed firearms...

Ohio former House Speaker Larry Householder to stand for reelection amid bribery charges

Republican Rep. Larry Householder’s name will be on the ballot Election Day as the disgraced Ohio lawmaker intends to serve his district for another...

Billionaire Robert Smith to Pay $140 million after admitting to tax evasion

Billionaire Robert Smith will pay about $140 million and acknowledge wrongdoing to end a four-year U.S. tax investigation involving assets held in offshore tax...
Advertisement
Advertisement

Latest News

This Week

Medical device maker Merit Medical agrees to pay $18m to settle false claims

Medical device maker Merit Medical Systems Inc. (MMSI), of South Jordan, Utah, has agreed to pay $18 million to resolve allegations that the company...

Wells Fargo fires more than 100 workers over abuse of COVID-19 relief funds

Wells Fargo & Co has fired about 100 to 125 employees for unethically availing themselves of coronavirus relief funds, according to a source familiar...

Spain extradites former bank CEO sentenced in Iran for corruption

Spain has extradited a fugitive former Iranian executive implicated in a large financial corruption case, in what Iran’s judiciary says is the first such...

Goldman to pay over $2 billion in DOJ’s 1MDB Probe

Goldman Sachs Group Inc. has reached a long-awaited pact with the U.S. Department of Justice to pay more than $2 billion for the bank’s...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks