@DouglasTodd ‘People are dying’ — Canada must expose dirty money now

Longstanding issue:

In authoritarian countries, Canada has a reputation for having the weakest anti-money-laundering laws in the democratic West.

So, with the recent crackdown on Russian oligarchs who prop up Vladimir Putin, experts say it is urgent that Canada finally and rapidly make it possible to track the trans-nationals who secretly ship ill-gotten money into this country through a process dubbed “snow-washing.”

Corporate lawyer Kevin Comeau, an expert on money laundering, says “it’s terrific“ that Prime Minister Justin Trudeau has announced an agreement with NDP leader Jagmeet Singh to speed up the deadline for a publicly accessible registry to identity the real owners of companies, particularly those invested in real estate.

It was three years ago that Trudeau first promised a national corporate ownership registry, which would be searchable by name. The Liberals slated it to be up and running by 2025. Now, in the light of Russia’s invasion of Ukraine, the pledge is that the registry will be active by next year.

Even though Comeau thinks a national ownership registry, loosely modelled on one recently started in B.C., could actually be pressed into place by the end of this year, he is hopeful the federal government will meet its 2023 deadline — because “people are dying. There’s a lot of political pressure on them.”

Such registries, which reveal the true owners of corporations, trusts and property, are the only way that Western governments can follow through on their high-profile promises to sanction corrupt billionaires and others who benefit from being cronies of ruthless strongmen.

A working ownership registry that can identify and lead to the seizure of illicitly held assets in Canada — which should have been put in place years ago to stop dirty money pouring into the nation’s real estate — “will put pressure on the oligarchs and in turn pressure on Putin to stop this war,” Comeau said.

“There is a huge incentive for persons from authoritarian regimes to get their money out and send it into a western liberal democracy that has the rule of law, which protects against arbitrary confiscation” by volatile leaders, said Comeau, who has produced reports on money laundering for the C.D. Howe Institute, Transparency International and other organizations.

“Why do they pick Canada? Of the large western liberal democracies, we have the weakest anti-money-laundering rules.” Britain, the U.S. and European Union nations are far ahead in monitoring and sometimes targeting the real owners of laundered assets.

The Economist magazine has found that Russia, which last month invaded Ukraine, has the most billionaire oligarchs who are cronies of autocratic leaders. Russia is followed by China, which has a stronger presence in Canada through trade, international education and immigration. Saudi Arabia, Iran and many other regimes also have rich citizens seeking offshore havens to hide their tainted money.

Ownership registries should have been up and running much earlier in Canada, said Comeau. But somehow, many Canadians bought the idea that global money-laundering and tax evasion is a “victimless crime”, and that it’s useful to have foreign money, even the proceeds of corruption, flow into an economy.

Slowly, however, more Canadians have been realizing it is “a horrible thing,” especially for housing affordability.

“In the past few years, people have become aware there is a real problem of laundered money coming in from around the world and entering our real estate market. That has been driving up prices for Canadians, such that many persons couldn’t afford to buy a home in the cities and towns which they grew up in,” Comeau said. “It’s the first time in Canadian history that middle-class persons, as a group, cannot purchase homes in their own cities and towns.”

And taxpayers don’t have to worry about the cost of setting up federal and provincial registries that will make it possible to expose shady owners of corporations and properties. On the contrary.

A public ownership registry creates a “massive weapon” against oligarchs, kleptocrats, human traffickers and tax evaders because it is the key to seizing their assets, including properties they might have held for decades.

“It’s a huge source of revenue for the Canadian government and the provinces. It can bring in many, many billions of dollars. You’re talking millions of dollars to set up a registry. You will probably bring in a hundred-fold more by having a registry in place. Just by (seizing) 20 houses, you’ve paid for a registry many times over.”

Since Comeau is among those who are calling for a “pan-Canadian” registry system that includes the provinces, which have jurisdiction over real estate, he praises the B.C. NDP for helping lead the way by last year creating a beneficial housing ownership registry.

Even though B.C.’s registry has a few weaknesses, Comeau said they are fixable.

With a bit more spending, he said, B.C. could remove the $5 paywall for each search, provide a line for tipsters, require third-party identify verification, and make sure foreign passports written in non-Latin scripts, such as Russian, Chinese and Arabic alphabets, are translated into English.

In addition, Comeau said, people found to make fraudulent entries on any Canadian registry should be subjected not only to fines — “which are often just the cost of doing business” — but to potential prison sentences.

With such reforms, Canada and the provinces would no longer be known around the world as a “snow-washing” capital.

Source: Douglas Todd: ‘People are dying’ — Canada must expose dirty money now

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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