Canada Business Corporations Act
Date: 2023_04_28
Chamber: HOUSE OF COMMONS
Mr. Majid Jowhari: today I rise to address the chamber on Bill C-42 , which would amend the Canada Business Corporation Act, or CBCA, and make consequential changes to other statutes. We are here to discuss this proposed legislation because a lack of beneficial ownership transparency is impairing Canada's ability to combat serious financial crimes, such as fraud, money laundering and tax evasion. It also limits our capacity to enforce domestic and international sanctions and to effectively trace and freeze financial assets. Finally, it is impacting the trust of Canadians and foreign investors in our marketplace. Our inability to quickly and quietly identify a company's beneficial owner delays criminal investigations; denies law enforcement leads to potential suspects, witnesses and evidence; and impairs the identification and seizure of suspected proceeds of crime. It also reduces the ability of private businesses to protect themselves. Bad actors have long used corporate vehicles to obscure the ownership and control of assets to the detriment of Canadians' and other's confidence in private businesses. A public beneficiary ownership registry would complement the existing tools of law enforcement, while facilitating the identification of changes of ownership without the risk of alerting the suspects of an ongoing investigation. In turn, this would help prevent the dissipation of criminal assets subject to investigation or freezing orders. The need for this type of registry has, by now, been well established, notably by public consultation held by the Government of Canada in 2020, as well as the Commission of Inquiry Into Money Laundering in British Columbia more recently. Such registries have, moreover, existed in the United Kingdom and many countries since 2016 and have proven a useful tool in deterring misuse of corporations for illicit financial activity by law enforcement, journalists and civil society. In 2018, for example, Transparency International found that the then Czech prime minister was the sole beneficiary of two trust funds owning shares of a Czech conglomerate in receipt of EU subsidies. In a significant conflict of interest, Slovakia's public registry showed that the prime minister remained the ultimate owner of these trusts. In 2019, the department responsible for the U.K. registry, the world pioneer, published a review of lessons learned so far. All law enforcement organizations the department spoke to had used the registry to inform criminal investigation, with most reporting using it at least weekly and noting the positive effect it had on their work. According to other resources, the U.K. registry was accessed more than two billion times a year. More recently, the OpenLux investigation by journalists who had compiled and analyzed data from the Luxembourg's public beneficial ownership registry uncovered politically exposed persons, criminal organizations, an arms dealer and oligarchs linked to Luxembourg companies. A beneficial ownership registry would also serve tax authorities here and abroad, who would be able to use the information to track and fix tax evasion and aggressive avoidance. The Panama papers, as well as other mass leaks, have shown that private players look for places with weak beneficial ownership transparency and then layer ownership of corporate entities across those jurisdictions to obscure personal ownership interests and income. The longer the chain of entities between the income and the beneficial owners, the harder the truth is to ascertain. We should not underestimate the significant burden tax evasion and avoidance have on the Canadian economy. More generally, placing beneficial ownership information in an accessible registry would provide criminal and civil intelligence value, helping law enforcement and regulators stay abreast of evolving fraud cases, trends and ways corporations may facilitate these trends. This awareness supports actionable intelligence to generate investigative leads. Certain government authorities may also have a bona fide interest in identifying the beneficial owner of the corporations they do business with, licence or oversee. Making beneficial ownership information publicly available further supports good governance and trust. All businesses can check who they are doing business with by reviewing the registry of potential suppliers and customers, and businesses regulated for anti-money laundering purposes can consult the registry to support their due diligence. Registries and the transparency they foster further serve as a deterrent to illicit actors. When reporting and disclosure requirements are tightened against a particular sector, product or service, prospective criminals will shift their tactics to find alternative ways of laundering funds. By depriving owners of their anonymity, registries will make Canada a less desirable jurisdiction to commit financial crime, forcing them to use more risky criminal vehicles or to go somewhere else entirely. All in all, it is clear that the registry proposed by the bill would significantly improve Canada's ability to fight financial crime. It would help public authorities verify owners across corporate layers, help businesses better validate the identity of their trading partners, fight money laundering, fight tax aversion, and render more difficult the use of corporations for illicit activities. I hope all members of the House will join us in supporting the passage of this bill.