Beneficial Ownership Transparency
Canada Risks Becoming a Haven for Corrupt Capital,
According to New Study by Transparency International Canada
December 9, 2016
Canada is one of the world’s most opaque jurisdictions when it comes to ownership of private companies and trusts, said a new report released today by Transparency International Canada (TI Canada). Rich in examples, analysis and recommendations, the report was produced by Adam Ross, TI Canada’s lead researcher on beneficial ownership transparency with a team of five subject matter experts and oversight by TI Canada’s board and legal committee.
The report states that anonymous companies and trusts are the getaway cars of financial crime because they enable criminals to hide behind a veil of secrecy, while giving them access to bank accounts and the means to use their illegally obtained wealth in Canada’s legal economy.
Using specific case studies and original research into the luxury property sector in Vancouver, TI Canada’s report demonstrates how little is known about who truly owns Canadian companies, trusts and the assets they control.
The average price of a home in Canada has skyrocketed in recent years, with the largest increases in Toronto and Vancouver. An influx of overseas capital is one of the causes. Nevertheless, the extent and impact of foreign investment remains unknown since very little data is collected on property owners.
“Individuals can use shell companies, trusts and nominees to hide their beneficial interest in Canadian real estate. This makes property attractive for money laundering, deprives the government of tax revenue, and hinders data collection, making it difficult to analyse the impacts these ownership structures have on the real estate market,” said TI Canada Executive Director, Alesia Nahirny.
The ease with which Canadian companies can be established, and the absence of data on their owners, makes them attractive vehicles for financial crime.
“In Canada, more rigorous identity checks are done for individuals getting library cards than for those setting up companies. Crimes committed through legal entities and arrangements are difficult to detect and to prosecute, as the individuals behind them can remain anonymous even from the government agencies entrusted with enforcing our laws and regulations,” said TI Canada Chair and President, Paul Lalonde.
With its new report, TI Canada is calling on the Canadian government to require all companies and trusts in Canada to identify their beneficial owners. This information should then be collected in a central registry that is accessible to the public in open data format.
“The Canadian government must take immediate steps to require all companies and trusts in the country to identify their beneficial owners to ensure Canada does not become a haven for corrupt capital,” reinforced Nahirny.
The report was launched in Vancouver on December 9, 2016 at 9:00am PST (12:00pm EST).
The launch coincided with International Anti-Corruption Day, and was followed by panel discussions on beneficial ownership transparency and corruption/anti-money laundering enforcement in Canada.