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Diane Francis: Trudeau Liberals content to ignore money laundering epidemic


Earlier this month, Canada passed a set of reforms to combat money laundering and bring about greater corporate transparency. The International Consortium of Investigative Journalists (ICIJ) characterized these reforms as a means of curbing “‘snow washing’ — the laundering of dirty money through Canada’s financial system.”

This is welcome and overdue news. The Trudeau-Singh coalition has failed for years to address the fact that Canada is a haven for dirty money.

The reforms became law on Nov. 2 under an amendment to the Canada Business Corporations Act. They will require federally registered companies to disclose information about any beneficial owners they may have, which is to be made available in a public registry.

For years, Canada has had anti-money laundering and terrorist financing legislation, but transparency requirements were scant. This has allowed unsavory entities to hide behind proxies, corporations, offshore vehicles, trusts, lawyers, accountants, bankers, brokers and other “enablers.”

Canada has been a laggard in anti-corruption efforts. Transparency International has consistently ranked Canada near the bottom of the pack of all G20 countries due to its failure to meet G20 anti-money laundering commitments.

In 2019, Canada was embarrassingly outed by the U.S. State Department, which described Canada as a “major money laundering country,” alongside Afghanistan, the British Virgin Islands, China, Macau and Colombia. That same year, the Liberal budget pledged $200 million over five years to address financial crime, to little avail.

Then, in 2021, Global Financial Integrity (GFI) — a Washington D.C.-based think tank focused on corruption and money laundering — issued a report that underscored Ottawa’s ongoing problem involving illicit funds invested in real estate.

In an analysis of 35 Canadian court cases from 2015 to 2020, GFI concluded that US$626.3 million ($859.1 million) had been laundered in the country in that period, which is a drop in the bucket considering how a 2019 RCMP report estimated that $46.7 billion was laundered in Canada in 2018 alone.

GFI found that about half the money laundered through Canadian real estate came from outside the country, with China accounting for nearly a quarter of the foreign funds. Of the domestic money laundered through real estate, well over half came from drug trafficking.

The top “facilitators” of the laundered money, according to GFI’s analysis, were lawyers (22.8 per cent), real estate agents (14.2 per cent) and developers (11.4 per cent).

The revelations in GFI’s report were embarrassing, but unfulfilled promises to enact laws to fix the situation were nothing new. In February 2019, Canada’s then-finance minister Bill Morneau said that fighting money laundering was on the federal government’s agenda following scandals involving British Columbia casinos.

In June 2019, Canada’s finance and justice ministers discussed solutions to the money laundering problem, which covered the possibility of improving transparency by implementing beneficial ownership registries. However, at the time, Morneau said that privacy and regulatory concerns complicated the situation.

Liberals have paid lip service and not much else to solving money laundering, despite evidence that dirty money facilitates international crime and terrorism while pushing up housing costs for ordinary Canadians. Even when these problems are pointed out, nothing happens — sometimes, the government makes matters worse.

In October 2020, for instance, Ottawa was criticized for doing little to control the flow of illicit funds; in response, Canada’s bank regulator, the Office of the Superintendent of Financial Institutions (OSFI), issued a press release announcing it would be dismantling its anti-money laundering section.

A retired OSFI official, Nichols Choules-Burbidge, explained why Canada failed to combat this financial scourge in a 2020 interview with the Financial Post.

“This dismantling is despite the fact that banks are the riskiest part of the financial sector,” he said. “This is yet another backward step by Canada as the government ignores the dismantling of our anti-money laundering regime. Canadian lawyers are not covered at all and are known to be the highest risk.”

Canada’s real estate, financial and legal communities have balked at proposed regulations that would require them to report questionable clients or transactions, as is the standard in Britain.

While unsavoury players cash in and Canada’s reputation remains tainted, the biggest culprit is the incompetent Liberal government. It will be interesting to see if this registry of beneficial ownership and other needed reforms come to life. Don’t bet on it.