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Budget 2017: Canada Commits to Strengthen Beneficial Ownership Transparency


The Government of Canada committed in Budget 2017 to strengthen the transparency of beneficial ownership information in Canada, thereby safeguarding Canada against money laundering, terrorist financing, and tax evasion, a move that is welcomed by the members of Publish What You Pay Canada. “This is an important first step to address the problems in Canada’s current system,” stated Claire Woodside, Director of Publish What You Pay Canada. “This commitment places beneficial ownership firmly on the government’s agenda and we hope it will ensure timely action to ensure that Canada does not continue to be a safe haven for companies with something to hide.”

Major corruption scandals that have erupted in recent years share one common characteristic; they involve individuals or companies that use a complex web of anonymous companies and trusts to hide illicitly sourced funds. The Panama Papers leak reveals the extent to which individuals will go to conceal their private wealth and investments from the public tax systems where they reside. Transparency of beneficial ownership information can enable more effective compliance and enforcement measures and can help government tax agencies to increase revenues.

“We are pleased that the Government of Canada is focusing on the issue of corporate ownership transparency” stated Paul Lalonde, Chair and President of Transparency International Canada. “Beneficial ownership reform presents an opportunity for Canada to meaningfully reduce financial crime and honour our international commitments.”

Despite growing international consensus that beneficial ownership transparency is critical to address tax evasion and money laundering, Canada has failed to adequately address this problem at home. Recent revelations have shed light on the practice of “snowwashing” - the use of Canada’s good reputation and economic stability as a cover to make suspicious transaction seem legitimate - the commitment in today’s budget will help to minimize the risks to Canadians and citizens in other countries, posed by Canada’s opaque corporate ownership system and protect our reputation as a good place to do business.

These risks were detailed in a 2015 risk assessment of money laundering and terrorist financing undertaken by the Government of Canada identifies Canadian corporations as highly vulnerable to money laundering and terrorist financing. The government notes that this ‘vulnerability relates to the ability of these entities to be used to conceal the beneficial ownership, therefore facilitating the disguise and conversion of illicit proceeds.’

Given the scope of the problem, “the Government of Canada should move swiftly to implement a national strategy,” stated Dennis Howlett, Executive Director of Canadians for Tax Fairness. “It is critical that the federal government provide leadership on this as they have the responsibility of ensuring all levels of government fulfil obligations to uphold international agreements. While the federal government must act, this is clearly in provincial government interests, as beneficial ownership transparency can help provincial government go after tax evaders and increase provincial revenues.”

Contacts

Emily Nickerson
Director, Publish What You Pay Canada
enickerson@pwyp.ca
T: 613-237-6768 x 329
M: 519-803-3502

James Cohen
Executive Director, Transparency International Canada
James.Cohen@transparencycanada.ca
T: 416-488-3939

Dennis Howlett
Executive Director, Canadians for Tax Fairness
Dennis.howlett@taxfairness.ca
T: 613-334-5658