Federal government promises public registry to reveal who’s really behind Canadian companies

Sanctioned Russian oligarchs, wealthy tax cheats and corrupt businessmen will soon have to take their hidden assets elsewhere, as the federal government has promised to reveal the true owners of companies in Canada in a public registry that will be operational by end of next year.

The promise to accelerate the creation of this years-long transparency tool was part of the Liberal-NDP agreement reached on Tuesday that will keep Prime Minister Justin Trudeau in power until 2025.

“It’s been a priority for the NDP for a long time, but it’s particularly important in the current context in terms of being able to put more pressure on (Russian President) Vladimir Putin and his cronies. A public registry of beneficial owners will really help us understand how much wealth they hold in Canada and where they hold it,” said NDP Finance Critic Daniel Blaikie.

Since the 2016 Panama Papers revealed the extent of the abuses of anonymous front companies, beneficial ownership registers have become the go-to tool for rooting out criminal acts veiled by the appearance of corporate legitimacy. Both the UK and the EU have established public registers to allow anyone to search for the beneficial owners of a company registered there.

Currently in Ontario, only names registered officers of a company are publicly available, and there is no requirement that such persons have any ownership or control. In some cases, these are people paid to sign documents.

Canada has been an international laggard, largely because most companies are registered in all 13 provinces and territories, each with its own set of rules and varying levels of public information disclosure. Even some of the offshore tax havens in the Caribbean and elsewhere, which have acted as secret repositories of wealth for decades, have been forced to establish beneficial ownership registers and currently have more transparency than Canada.

During last year’s election campaign, Trudeau pledged to establish a beneficial ownership registry, but said it would not be ready until 2025.

“That date seemed a bit far off,” said James Cohen, executive director of Transparency International Canada. “But the invasion of Ukraine and the importance that global illicit financial flows have played there has focused the minds of the Western world on this issue,” he said.

Tuesday’s announcement accelerated that two-year deadline, reflecting the urgency to stamp out the misuse of Canadian companies. The UK has also passed languishing fast-track legislation that aims to improve corporate transparency.

Details on how the Canadian registry will work and what information it will contain have yet to be announced. The Ministry of Finance did not respond to questions by the deadline.

Transparency International Canada wants the register to be online and free, with downloadable data and verification of information to ensure its reliability.

“The problem is getting it right,” said Vanessa Iafolla, a professor at Saint Mary’s University who studies financial crime. The UK’s new legislation aims to address many of the issues that have surfaced in its own beneficial ownership register, created in 2016, including duplicate and misspelled names, typos and even obvious fake owners, such as Mickey Mouse.

“Canada should be able to learn from other jurisdictions as an example of what it can achieve,” Iafolla said.

A publicly accessible registry, as opposed to the private registry in the United States accessible only to law enforcement and banks, is important because it lets business people know who they are doing business with, Iafolla said, even if she is concerned that this puts more responsibility on the individual to prevent fraud.

“I’m afraid this is just one more reason to say to victims, ‘Why didn’t you check more thoroughly before doing business with this person?'”

She added: ‘If we were to put this into use, I think we need to make sure that the people in charge of the investigation actually use it to serve the ends of justice.’

Iafolla pointed to FINTRAC, Canada’s anti-money laundering agency, which receives millions of suspicious transaction reports but has faced only a handful of prosecutions in the past five years. .

“If you have a system that produces intelligence, then why doesn’t that intelligence produce prosecutions and convictions?”

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