Canada’s anti-money laundering are inadequate says CD Howe

Tougher provisions will be needed to fight the issue says new report

Canada’s anti-money laundering are inadequate says CD Howe
Steve Randall

Canada’s protections against money laundering are inadequate according to a new report.

A new report from the CD Howe Institute says that Canada has some of the weakest protections among western liberal democracies and that allows a large share of dirty money to flow into the country, especially through real estate.

Last year calls for tougher rules were made by several bodies and figures from the RCMP suggested the amount of money laundered through Canada each year was around $5-$15 billion; but this latest report suggests that is seriously short of the reality.

“While it is impossible to estimate the exact amount of money laundering, a realistic estimate of the magnitude of dirty money laundered in Canada each year likely lies in range of $100- $130 billion,” says Kevin Comeau, author of the report “Why We Fail to Catch Money Launderers 99.9 percent of the Time.”

He says that money launders are aided by the effective invisibility of their crime, their anonymity, and the legal obstacles to following their dirty money.

Comeau questions why neither the House of Commons Standing Committee on Finance in its November 2018 report on money laundering, nor the December 2018 amendments to the Canada Business Corporations Act, included key measures that he says would address the money laundering issue.

“Anonymity and invisibility could be reduced by implementing a publicly accessible registry of beneficial ownership of companies, trusts and real estate,” he says. “Structured properly, a public registry would offer a two-way flow of information – communication of beneficial ownership information to the world and communication of foreign-based information to Canadian authorities – which would bring more bad guys into the light of day.”

The registry would be maintained by mandatory declarations of beneficial ownership and there would be meaningful sanctions for false declarations.

Privacy concerns
The report notes that privacy is a concern and recommends that a register should be split into publicly accessible and strictly confidential sections.

That would remove sensitive data such as identity documents, financial information, or business operations, from public access, while enabling law enforcement and other agencies to see information on a need-to-know basis.

Comeau advocates a new criminal offence for those that do not comply with regulations.

“Obstacles to following the dirty money could be reduced by creating a new criminal offence: a false declaration of beneficial ownership, whether made on a public registry or submitted by a customer to a Reporting Entity,” he says. “Not only would such an offence bring more integrity to the beneficial-ownership information being disclosed; it would also provide a solid base from which law enforcement agencies could conduct investigations of suspicious transactions.”